Frank DiPascali will help prosecutors understand the Madoff fraud

HOW did Bernie do it? With an old IBM computer, oodles of chutzpah and, it seems, help from multiple sidekicks. On Tuesday August 11th Frank DiPascali, the senior lieutenant in Bernard Madoff’s bogus fund-management business, admitted to fraud and was arrested. His willingness to confess and, apparently, to co-operate—in contrast to Mr Madoff, who went to jail insisting he acted alone—is a coup for prosecutors. They will waste no time going after the unidentified “other people” with whom Mr DiPascali says he and his boss perpetrated the scam.

Mr DiPascali was the main point of contact for investors, who ranged from Jewish charities to film moguls. He also oversaw the mechanics of the vast Ponzi scheme. It purported to be making steady, double-digit returns trading options on a share index. In fact, client funds sat in an account at JPMorgan Chase and were withdrawn only to meet redemptions or to be parked in Treasuries and the like. This was “nothing more than a slush fund”, according to the complaint against Mr DiPascali by the Securities and Exchange Commission. …