The Wall Street Journal had an article today stating that investigators are examining the role of Frank DiPascali.
Authorities are trying to determine who helped Mr. Madoff carry out what they say appears to be at least a 30-year scheme that may have caused at least $50 billion in losses. They are seeking information from the accounting firm that handled Mr. Madoff's audits for decades and are examining the role of Frank DiPascali, who dealt with client accounts and worked at Mr. Madoff's firm for more than 30 years, said a person familiar with the matter.
"If you wanted anything, a new account, money in, money out, you called Frank," said one Madoff investor. "Nothing moved in that office without him, operationally," this person said.
After Madoff’s arrest, SEC investigators questioned DiPascali, and he claimed he didn’t know who was responsible for clearing and settling trades on the investment-advisory side of the firm. The article went on to state “Investigators are looking at the roles that may have been played by members of the tightknit Madoff family. Mr. Madoff's brother, two sons and a niece worked at the firm, but not in the investment-management business where the alleged fraud occurred. Andrew Madoff had money invested with his father and received the same account statements as other clients, according to a person briefed on the matter.
I’ve highlighted “account statements” for a reason. Currently, it appears that Bernard Madoff would have people believe that he alone was responsible for the fraud. But logistically, it would be impossible. There had to be a very complex software application that generated the fake account statements, showing imaginary trades, which were being sent to some of the most savvy investors in the world. I think DiPascali is going to be the first of many names that are involved with this fraud. It would probably be interesting to talk to their Chief Information Officer.
I looked up Bernard L. Madoff Investment Securities on Linkedin and found titles such as portfolio manager, trader, quantitative analyst, and equity trader. One employee, Josh Stampfli, had the title of “head of automated market making.” He described himself as follows: “I am head of the automated market making group at Bernard Madoff – very high volume/frequent quant/algo computerized equity trading.” Something tells me Josh is going to be updating his bio soon. Another profile in need of a quick update is Larry Birch, who proudly describes his role as “Director of Sales and Marketing at Bernard L. Madoff Investment Securities LLC.” Portfolio manager Reed Abend states “I currently run a long/short equity, options and futures portfolio” at Bernard L. Madoff Investment Securities. Here’s Peter Tiletnick’s explanation of his role as “Trader- Proprietary Portfolio Management Unit”:
• Worked amongst portfolio managers to provide equity, options, and futures executions for all proprietary strategies.
• Assisted in risk management, hedging, and the development of portfolio strategy/structure on the desk.
• Supported a high turnover market neutral mean reverting quantitative algorithm by assisting in accounting reconciliation, trading, and thesis generation.
• Retained a clear working knowledge of back office operations (Pete: you may want to edit this to “retained a fuzzy working knowledge) and market structure with a moderate comprehension of financial statement analysis.
Madoff’s company was such a deliberately complicated mess that it’s likely these people were in fact conducting trades for the legitimate side of the business, with no knowledge of the fraud, and I feel bad for them. Having Madoff Securities on their resumes is like the mark of cain, and they’re now in one of the toughest job markets in decades, especially for the financial industry.
