Frank DiPascali, Bernie Madoff‘s top financial aide, pleaded guilty on Tuesday to ten criminal counts, including conspiracy, tax evasion, and securities fraud. He was taken into federal custody immediately after the hearing, at which he had waived indictment and admitted to helping Madoff falsify trading records for decades.
Although he faces up to 125 years in federal prison for his crimes, he may receive a lenient sentence due to his cooperation with the prosecution. Other than Madoff (who received a 150-year sentence) and DiPascali, only accountant David Friehling has been charged in connection with the massive Madoff fraud. DiPascali likely has a wealth of information on many potential targets of investigation and has been cooperating with the prosecution since January. Based upon his cooperation, the prosecution recommended a bail package pending sentencing in his case. Despite the recommendation, Judge Richard Sullivan denied bail, ordering DiPascali into custody immediately. Whether he will benefit from his cooperation at sentencing remains to be seen.
One of the prosecution’s most formidable tools in a criminal case is the bargaining power inherent in its prosecutorial discretion. The prosecution usually wields significant power at sentencing. In other accounting scandal cases, highly culpable defendants who have cooperated have received light sentences in comparison to their former co-workers. Scott Sullivan, for instance, former WorldCom CFO who testified against CEO Bernard Ebbers, has already returned to his home in Boca Raton, after serving four years of his five-year sentence. Ebbers, on the other hand, is scheduled for release in 2028. Jeffrey Skilling, former president of Enron, is also scheduled for release in 2028, whereas CFO Andy Fastow received only six years, due to his significant cooperation with the prosecution.