Bernie Madoff's right-hand man testified in federal court Monday that he knew he and others were in trouble the instant he got a cellphone call from his boss five years ago telling him that the firm was broke and the FBI was at the offices.
"I said, 'Why are you calling me?' and I threw the phone across the room," former aide Frank DiPascali said in a long-awaited appearance at the trial of five other Madoff aides. "I knew I was going to jail, I knew the nature of the operation, and I knew why the firm was bust."
Testifying barely a week before the fifth anniversary of the Dec. 11, 2008, call that tipped him off to the imminent collapse of Madoff's massive Ponzi scheme, the government's star cooperating witness painted a picture of a firm immersed in fooling customers, auditors and regulators for decades.
"For as long as I can remember," DiPascali, 57, who began working for Madoff in 1975, answered when a prosecutor asked how long the practice of documenting fake trades had been going on.
Former Madoff account managers Annette Bongiorno, 65, of Manhasset, and Joanne Crupi, 52, of Westfield, N.J., operations director Daniel Bonventre, 66, of Manhattan, and computer programmers Jerome O'Hara, 50, of Malverne, and George Perez, 47, of East Brunswick, N.J., are accused of helping Madoff pull off his scheme.
DiPascali, a top Madoff lieutenant who pleaded guilty in 2009 and faces up to 125 years in prison, is the fourth cooperating witness to appear at the trial, now in its second month. His testimony is expected to continue when the trial resumes on Wednesday.
Implicating all the defendants in his first day on the stand, he testified that Bongiorno -- a former Queens neighbor who helped him get hired by Madoff -- regularly filled customer account statements with fictional trades concocted from old trading data in The Wall Street Journal.
He also said she played a key role in re-doing account statements after Avellino & Bienes, an accounting firm that invested client money with Madoff, became the target of a 1992 SEC probe, sending Madoff into a panic that "peeling away the onion" might reveal his own fraud.
"We basically circled the wagons," testified DiPascali, who said he was there when Madoff told Bongiorno that phony account statements had to be replaced with more credible phony account statements. "He said, 'This is unacceptable . . . We need to do this, we need to do that, and we need to do it now.' "
He also recounted another episode in which prosecutors say that Madoff's aides fooled an auditor for a large client by fabricating and printing on the spot a report that appeared to verify trading activity.
When DiPascali left the auditor to retrieve the report, he said, he found O'Hara, Crupi and Perez "tossing it around like a medicine ball" and laughing hysterically. He asked why.
"They explained to me that the document should look used, and I should not bring a hot, warm piece of paper up to an auditor," he testified. "They had put it in the refrigerator."