Professional Documents
Culture Documents
Defendant.
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COUNT ONE
(Conspiracy to Commit Securities Fraud, Investment Adviser Fraud,
Falsify Books and Records of a Broker-Dealer, Falsify Books and
Records of an Investment Adviser, Mail Fraud, Wire Fraud, and
International Money Laundering)
York/ most recently at 885 Third Avenue/ New York/ New York.
dealer and also/ on or about August 25/ 2006/ registered with the
statements, perjury, false filings with the SEC, and theft from
December 11, 2008, the day that Madoff was arrested. During his
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DIPASCALI, and other co-conspirators were responsible for, among
computer and other systems that were used to give the false
funds had been invested, and lying to the SEC and an accounting
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other securities/ and financial instruments/ and representations
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The "Split Strike" Strategy
Madoff would opportunistically time the entry and exit from the
strategy; and (e) when the IA Clients' funds were not invested in
bills.
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DIPASCALI, JR., the defendant, and other co-conspirators, that
their funds were invested with BLMIS using the Split Strike
fiction in that the Split Strike Clients' funds were not invested
documents that falsely made it appear that BLMIS had achieved the
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Madoff informed DIPASCALI that he had decided to Uenter the
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Strike Clients reflected prices that fell within the range of
pertinent day; and (b) there had been sufficient actual trading
Clients. After such decisions were made, DIPASCALI and other co-
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transactions that had not been executed and securities positions
year.
that their investments with BLMIS had generated the returns they
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had been promised by Madoff when, in fact, their funds had not
shortfalls between the expected returns and those that had been
expected returns.
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Deceiving The SEC And A European Accounting Fir.m
occurred. When the SEC and the European Accounting Firm reviewed
created for the sole purpose of misleading the SEC and others
SEC that BLMIS was not an investment adviser, but rather operated
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considered to be an investment adviser, and to conceal the scope
To that end, Madoff also wanted to create the appearance for the
SEC that, contrary to what IA Clients had been told - that is,
the SEC would uncover, through records it might obtain from third
Clients. 2
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DTC, among other things, creates efficiencies in the
clearing and settlement of securities transactions by retaining
custody of securities on behalf of financial institutions, and
recording on its books and records changes in the ownership of
those securities.
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The limited number of securities that BLMIS held on
behalf of IA Clients were those securities that IA Clients
deposited with BLMIS, not securities purchased by BLMIS on behalf
of the IA Clients. BLMIS also held securities at DTC for its
market making and proprietary trading businesses.
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clients at the time. At Madoff's direction, FRANK DIPASCALI,
the 2004 Special Clients for the purpose of misleading the SEC
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conspirators involved in the preparation of the 2004 Special
appearing to explain why BLMIS did not hold any securities at DTC
Clients ll
). SpecificallYt DIPASCALI and other co-conspirators
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Among other things, DIPASCALI and other co-conspirators created
preparation for deceiving the SEC and anyone else who demanded
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operations, knowing that the European Accounting Firm's
the uEuropean scenario" that had been employed with the SEC) in
that had been sent to the European Clients and/or the European
operations.
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Deceiving The SEC In 2006
BLMIS was not executing any real securities transactions for its
IA Clients.
lied about the Split Strike strategy, the purported trades that
resulted from the execution of that strategy, and the size of the
IA business.
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European Accounting Firm in an effort to persuade the European
business. They also reflected trade amounts and times that were
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investment advisory clients' funds to be transferred to, and
account in New York, New York, which was principally used to fund
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other co-conspirators prepared lists of employees, employees'
The Conspiracy
about December II, 2008, in the Southern District of New York and
Sections 7Bj (b) and 78ff, and Title 17, Code of Federal
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78q(a) and 78ff, and Title 17, Code of Federal Regulations,
Securities Fraud
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statements made, in light of the circumstances under which they
fraud and deceit upon persons who invested in and through BLMIS,
in violation of Title 15, United States Code, Sections 78j (b) and
78ff.
80b-17.
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Falsifying Books and Records of a Broker-Dealer
make and keep for prescribed periods such records, furnish such
copies thereof and make and disseminate such reports as the SEC,
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Mail Fraud
scheme and artifice and attempting so to do, would and did place
delivered by the Postal Service, and would and did deposit and
take and receive therefrom such matters and things, and would and
Wire Fraud
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devised and intending to devise a scheme and artifice to defraud,
conspiracy that FRANK DI PAS CALI , JR., the defendant, and others
outside the United States, and funds from a place outside the
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Means And Methods Of The Conspiracy
and unknown, would and did carry out the conspiracy were the
following:
Clients.
States mails to give the appearance that BLMIS had invested those
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others about the nature, scale, and operations of BLMIS's IA
business.
effort to prevent the SEC from learning the truth about BLMIS's
IA business.
convert them to their own use and that of others without the
Overt Acts
price data.
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c. In or about the early 1990s, Madoff caused
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h. In or about January 1997, at the direction of
Strike Client.
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m. On or about September 10/ 2002/ DIPASCALI
conspirator.
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t. In or about November 2005, Madoff met with
York.
York.
containing false and fraudulent BLMIS books and records was sent
to the SEC.
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bb. On or about March 29, 2007, DIPASCALI caused
York.
fraudulent scheme.
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COUNT TWO
(Securities Fraud)
33, and 42 through 43, above, are hereby repeated, realleged and
connection with the purchase and sale of securities, did use and
(Title lS, United States Code, Sections 78j (b) and 78ff;
Title 17, Code of Federal Regulations, Section 240.10b-S;
Title 18, United States Code, Section 2.)
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COUNT THREE
(Investment Adviser Fraud)
33/ and 42 through 43/ above/ are hereby repeated/ realleged and
manipulative.
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COUNT FOUR
(Falsifying Broker-Dealer Books and Records)
33, and 42 through 43, above, are hereby repeated, realleged and
false and fraudulent BLMIS trade blotters to be made and kept and
COUNT FIVE
(Falsifying Investment Adviser Books and Records)
33, and 42 through 43, above, are hereby repeated, realleged and
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51. Between in or about September 2006 and on or about
willfully, and knowingly, by the use of the mails and means and
adviser, did cause BLMIS to fail to make and keep for prescribed
periods such records, furnish such copies thereof and make and
COUNT SIX
(Mail Fraud)
33, and 42 through 43, above, are hereby repeated, realleged and
about December 11, 2008, in the Southern District of New York and
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a scheme and artifice to defraud, and for obtaining money and
did take and receive therefrom such matters and things, and did
COUNT SEVEN
(Wire Fraud)
33, and 42 through 43, above, are hereby repeated, realleged and
about December 11, 2008, in the Southern District of New York and
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elsewhere, FRANK DIPASCALI, JR., the defendant, unlawfully,
New York.
COUNT EIGHT
(International Money Laundering To Promote
Specified Unlawful Activity)
33, and 42 through 43, above, are hereby repeated, realleged and
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transport, transmit and transfer, and caused others to transport,
outside the United States, and funds from a place outside the
York, New York, to the MSIL Accounts in the United Kingdom, and
(Title 18, United States Code, Sections 1956(a) (2) (A) and 2.)
COUNT NINE
(Perjury)
33, and 42 through 43, above, are hereby repeated, realleged and
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periodic examinations by the SEC. The SEC has broad authority to
about January 26/ 2006/ employees of the SEC took the voluntary
clients of its IA business; and (d) BLMIS managed only about $10-
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certificate by him subscribed, would be true, unlawfully,
Specification One
(Page 63, Lines 3-16)
Specification Two
(Page 87, Lines 1-9)
Specification Three
(Page 124, Lines 3-18)
Q: Yes.
A: No, no.
Specification Four
(Page 73/ Lines 1-9)
Specification Five
(Page 71/ Lines 12-14)
Specification Six
(Page 104/ Line 23 - Page 105/ Line 9)
A: Who are they, I guess there [are] about 20, the laraest
of which would be Fairfield, which I guess is an
offshore hedge fund. I am thinking of some of the
names, what they do. They are either a hedge fund or
some sort of a European institution. They are not
natural people like a client would be, Joe Schmo.
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Specification Seven
(Page 129, Lines 10-18)
Specification Eiqht
(Page 112, Lines 17-19)
COUNT TEN
(Income Tax Evasion)
63. For certain tax years between 2002 and 2007, FRANK
a money market account held in the name of the LLC; and (c)
employed by DIPASCALI.
about August 10, 2009, in the Southern District of New York and
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willfully, and knowingly, did attempt to evade and defeat a
the United States of America for calendar years 2002, 2005, 2006
into bank accounts held in the name of nominees and filing and
Income Tax Return, Form 1040, for the 2005 tax year, which return
Reported Additional
Calendar Taxable Corrected Tax Due and
Year Income Tax Paid Taxable Income Owing
FORFEITURE ALLEGATION
(Offenses Constituting Specified Unlawful Activity)
§ 981 (a) (1) (C) and 28 U.S.C. § 2461, all property, real and
property.
FORFEITURE ALLEGATION
(Money Laundering)
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Count Eight of this Information, FRANK DIPASCALI, JR., the
United States Code, Section 982(b) and Title 21, United States
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the defendant up to the value of the forfeitable property
described above.
LEV L. DASSIN
Acting United States Attorney
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