Professional Documents
Culture Documents
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ONE 2003 VIKING 61' CONVERTIBLE I
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MOTOR YACHT KNOWN AS DOROTHY JO,
HULL IDENTIFICATION NUMBER
VKY61562I203,
Plaintiff United States of America, by its attorney, Preet Bharara, United States Attorney
for the Southern District of New York, for its Complaint alleges, upon information and belief, as
follows:
I. JURISDICTION AND VENUE
§§ 981(a)(1)(C) and 981(a)(1)(A) seeking the forfeiture of all right, title and interest in the
following property:
2. This Court has jurisdiction over this action pursuant to 28 U.S.c. §§ 1345 and
1355(a).
omissions gi ving rise to the forfeiture took place in the Southern District of New York.
4. The Dorothy Jo is located in the Southern District of Florida under the custody
and control of the United States Marshals Service ("USMS"), following execution of a seizure
warrant issued by the Honorable Theodore H. Katz, United States Magistrate Judge for the
Southern District of New York, on or about April 29, 2009, pursuant to 18 U.S.c.
was the founder ofBLMIS, and served as its sole member and principal. In that capacity, Madoff
controlled the business activities of BLMIS. Madoff also owned the majority of the voting
shares and served as the Chairman of the Board of Directors of Madoff Securities International
Ltd. ("MSIL"), a corporation incorporated in the United Kingdom and an affiliate ofBLMIS, and
served as the Chairman ofMSIL's Board of Directors. Madoffalso served on the Board of
("NASDAQ"), and for a period served as the non-executive Chairman of NASDAQ. (lnf.
~~ 2-3).
10. On March 12, 2009, in connection with the execution of a massive Ponzi scheme
through BLMIS, Madoff pleaded guilty to securities fraud, investment adviser fraud, mail fraud,
wire fraud, two counts of international money laundering, money laundering, false statements,
perjury, false filings with the SEC, and theft from an employee benefit plan. Among other
things, Madoff admitted that despite his promises to clients and prospective clients that he would
invest their money in shares of common stock, options, and other securities of well known
corporations, he in fact never invested those clients' funds in the securities as he had promised.
(lnf. ~ 3).
11. On June 29, 2009, the Honorable Denny Chin sentenced Madoffto 150 years'
12. DIPASCALI was employed at BLMIS between on or about September 11, 1975
and on or about December 11,2008, the day that Madoffwas arrested. During his employment
at BLMIS, DIPASCALI had a variety of duties and responsibilities. By the early 1990s,
DIPASCALI was one of the BLMIS employees responsible for managing the vast majority of
BLMIS's IA accounts into which thousands of BLMIS clients invested, and eventually lost,
billions of dollars. Madoff, DIPASCALI, and other co-conspirators were responsible for, among
other things: receiving funds sent to BLMIS by clients of the investment advisory business (the
"IA Clients") for investment; causing the transfer ofIA Clients' funds between and among
various BLMIS bank accounts; handling requests for redemptions sent to BLMIS by IA Clients;
answering IA Clients' questiems about their purported investments; and developing the BLMIS
computer and other systems that were used to give the false appearance to clients, regulators and
others, that client funds were being invested as promised when, in fact, they were not. (lnf. ~ 4).
13. From at least as early as the 1980s through on or about December 11,2008,
Madoff, DIPASCALI and other co-conspirators perpetrated a scheme to defraud the IA Clients
by accepting billions of dollars ofIA Clients' funds under false pretenses, failing to invest the IA
Clients' funds as promised, creating and disseminating false and fraudulent documents to IA
Clients purporting to show that their funds had been invested, and lying to the SEC and an
14. To execute the scheme, Madoff solicited, and caused others to solicit, prospective
clients to open trading accounts with BLMIS, based upon, among other things, a promise to use
investor funds to purchase shares of common stock, options, other securities, and financial
instruments, and representations that he would achieve high rates of return for clients, with
limited risk. In truth and in fact, as DIPASCALI well knew, these representations were false.
Contrary to representations that DIPASCALI and other co-conspirators caused to be made over
the course of the scheme on millions of pages of account statements and other documents sent to
IA Clients, Madoff, DIPASCALI, and other co-conspirators knew that the IA Clients' funds were
not being invested in securities as promised. Moreover, Madoff, DIPASCALI, and other co
conspirators misappropriated IA Clients' funds and converted those funds to their own use and
the use of others. DIPAS CALI knew that BLMIS accepted billions of dollars of IA Clients'
funds, cumulatively, from individual investors, charitable organizations, trusts, pension funds,
and hedge funds, among others, and had established on their behalf thousands of accounts at
BLMIS and that those funds had been obtained through false and fraudulent representations.
(Inf. ~~ 6-7).
15. Beginning at least as early as 2003, BLMIS's market making and proprietary
trading businesses did not generate sufficient revenue to meet their expenses. In part to support
BLMIS's market making and proprietary trading businesses, between at least as early as in or
about 2005 and in or about 2008, at the direction of Madoff, DIPASCALI and other co
conspirators caused at least $250 million of BLMIS investment advisory clients' funds to be
transferred to, and between, the bank accounts that funded those businesses. Specifically, at the
transferred between and among a BLMIS account in New York, New York (the "BLMIS Client
Account"), accounts held by MSIL in London, United Kingdom (the "MSIL Accounts"), and
another bank account in New York, New York, which was principally used to fund BLMIS's
16. The Defendants in rem were acquired and maintained with funds obtained from
defrauded investors of the BLMIS investment advisory business, and funds traceable to such
funds.
The Dorothy Jo
17. On or about September 12,2002, DIPASCALI and his wife entered into a
purchase contract with Oyster Harbors Marine of Maine, a dealer for Viking Yacht Company, for
a 2003 Viking 61' Convertible motor yacht with Hull Identification No. VKY61562I203 for
$1,891,769.00. The vessel was later named the DorothyJo. The balance due after a $190,000
18. On or about September 10,2002, DIPASCALI paid the balance due on the
contract by causing approximately $1,701,769 ofIA Client funds that had been obtained by fraud
and to which he was not entitled to be wire transferred from the BLMIS Client Account to the
purchase a 2007 Mercedes Benz Model E350 4M AWD 4DR, VIN WDBUF87X97X221582.
23. DIPASCALI purchased the Defendant Vehicles for cash using bank accounts
funded with money acquired as a result of his employment with BLMIS, and with IA Client
funds that had been obtained by fraud and to which DIPASCALI was not entitled.
constitutes or is derived from proceeds traceable to ... any offense constituting 'specified
unlawful activity' (as defined in Section 1956(c)(7) of [title 18]), or a conspiracy to commit such
25. "Specified unlawful activity" is defined in 18 U.S.C. § 1956(c)(7), and the term
includes any offense listed under 18 U.S.c. § 1961(1). Section 1961(1) lists, among other
offenses, violation of Title 18, United States Code, Section 1341 (mail fraud), Title 18, United
States Code, Section 1343 (wire fraud), and "fraud in the sale of securities."
26. Title 18, United States Code, Section 981 (a)(2)(A) provides, in pertinent part:
in a transaction or attempted transaction in violation of ... section 1956 or 1957 of this title
(A) (i) with the intent to promote the carrying on of specified unlawful
activity; or
(i) to conceal or disguise the nature, the location, the source, the
ownership, or the control of the proceeds of specified unlawful
activity; or
29. Section 1956(a) further imposes a criminal penalty upon any person who:
(A) with the intent to promote the carrying on of specified unlawful activity; or
(B) knowing that the monetary instrument or funds involved in the transportation,
transmission, or transfer represent the proceeds of some form of unlawful activity
and knowing that such transportation, transmission, or transfer is designed in
whole or in part
(i) to conceal or disguise the nature, the location, the source, the
ownership, or the control of the proceeds of specified unlawful
activity; or
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(ii) to avoid a transaction reporting requirement under State or
Federal law.
(f) There is extraterritorial jurisdiction over the conduct prohibited by this section
if-
(1) the conduct is by a United States citizen or, in the case of a non-United
States citizen, the conduct occurs in part in the United States; and
31. Section 1957 of Title 18, United States Code, provides, in pertinent part, that
"[w]hoever '" knowingly engages or attempts to engage in a monetary transaction [in the United
States] in criminally deriyed property that is of a value greater than $10,000 and is derived from
specified unlawful activity" shall be guilty of a crime. A "monetary transaction" includes "the
§ 1957(f)(1).
32. Title 28, United States Code, Section 1355(b) provides in pertinent part that:
(A) the district court for the district in which any of the acts or
omissions giving rise to the forfeiture occurred, ...
WHEREFORE, plaintiff United States of America prays that process be issued to seize
and enforce the forfeiture of the Defendants in rem and that all persons having an interest in the
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Defendants in rem be cited to appear and show cause why the forfeiture should not be decreed,
and that this Court decree forfeiture of the Defendants in rem to the United States of America for
disposition according to law, and that this Court grant plaintiff such further relief as this Court
may deem just and proper, together with the costs and disbursements of this action.
PREET BHARARA
United States Attorney for
the Southern District of New York
Attorney for the Plaintiff
United States of Ameri
By:
SHARON E. F SE
BARBARA A. WARD
Assistant United States Attorneys
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VERIFICATION
STEVEN N. GARFINKEL, being duly sworn, deposes and says that he is a Special
Agent with the Federal Bureau of Investigation, and as such has responsibility for the within
action; that he has read the foregoing Verified Complaint and knows the contents thereof, and
that the same is true to the best of his own knowledge, information and belief.
The sources of deponent's information and the ground of his belief are official records
and files of the United States and information obtained directly by deponent during an
STEVEN N. GARFINKEL
Special Agent
Federal Bureau ofInvestigation
MARCO DASILVA
No. 01 DA6145603
Qualified in Nassamunw
EXHIBIT
A.
:
USDCSDNY ===::·'1\'I ·
noCUMENT
UNITED STATES DISTRICT COURT
ELECTRONICALLY FUJO \
SOUTHERN DISTRICT OF NEW YORK
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DATE FILErA.U~ 1_1 .~._. I
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UNITED STATES OF AMERICA -_.. - -'-=::..----"- ".
INFORMATION
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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.
deaJer 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
:.:c,mp 1.lter 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
Lmi ted risk. In truth and in fact, as FRANK DIPASCALI, JR., the
Madcff would opportunistically time the entry and exit from the
s:rategy; and (e) when the IA Clients' funds were not invested in
blJ.JS
their Eunds were invested with BLMIS using the Split Strike
Ei ,::T Lon 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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MadoEf informed DIPASCALI that he had decided to "enter the
"entered the market" were sometimes priced using data from market
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Strike Clients reflected prices that fell within the range of
pertinent day; and (b) there had been sufficient actual trading
out" C'f the purported stock and option positions and "buying"
C.ients. After such decisions were made, DIPASCALI and other co
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t r a.n~3act ions that had not been executed and securities positions
yrOdr.
tnat their investments with BLMIS had generated the returns they
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
occulred. 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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consJ.dered to be an investment adviser, and to conceal the scope
Te "that end, Madoff also wanted to create the appearance for the
SEC -:hat, contrary to what IA Clients had been told - that is,
beha i f '- BLMIS did not have custody of any such clients'
the SEC would uncover, through records it might obtain from third
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,_;llents at the time. At Madoff's direction, FRANK DIPASCALI,
the :2004 Special Clients for the purpose of misleading the SEC
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c.::onspirat.ors involved in the preparation of the 2004 Special
appearing to explain why BLMIS did not hold any securities at DTC
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Amonq other things, DIPASCALI and other co-conspirators created
pl'eparat ion for deceiving the SEC and anyone else who demanded
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,.Jpera.t ions, knowing that the European Accounting Firm's
:::te 'European scenario" that had been employed with the SEC) in
that had been sent to the European Clients and/or the European
opera t ic,ns .
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Deceiving The SEC In 2006
BLMIS was not executing any real securities transactions for its
Il~ C1 i ents .
SEC or" :>r about January 26, 2006. Among other things, DIPASCALI
l_ed about the Split Strike strategy, the purported trades that
rt~su1ted from the execution of that strategy, and the size of the
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bl..si~ess. They also reflected trade amounts and times that were
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lDvestment advisory clients' funds to be transferred to, and
;l.C':;()l.mt in New York, New York, which was principally used to fund
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The Conspiracy
about. December 11, 2008, in the Southern District of New York and
Sections 78j (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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fraud and deceit upon persons who invested in and through BLMIS,
LIl 'J:.olation of Title 15, United States Code, Sections 78j (b) and
'781':
8 i)b -1-; .
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mdke and keep for prescribed periods such records, furnish such
Cl)ples t.hereof 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
b'/ pri vate and commercial interstate carriers, and would and did
take and receive therefrom such matters and things, and would and
Wire Fraud
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olJtside 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
fo.Llowing:
Clients
Scates mails to give the appearance that BLMIS had invested those
c::)· ,:onspl rators caused false and fraudulent books and records to
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others about the nature, scale, and operations of BLMIS's IA
Dusiness.
effort to prevent the SEC from learning the truth about BLMIS's
II> ::Jllsiness.
::onvert them to their own use and that of others without the
Overt Acts
i. .Legal obj ects thereof, FRANK DIPASCALI, JR., the defendant, and
p:ice data.
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h. In or about January 1997, at the direction of
8t Llke Client.
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consplrator.
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t. In or about November 2005, Madoff met with
YCl"K
ie 1<-<':
c0ntainlng false and fraudulent BLMIS books and records was sent
~c the SEC.
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bb. On or about March 29, 2007, DIPASCALI caused
Yc d:.
fraudulent scheme.
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COUNT TWO
(Securities Fraud)
connection with the purchase and sale of securities, did use and
iTitle 15, 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
mdr.lpulative.
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COUNT FOUR
3::', dnd 42 through 43, above, are hereby repeated, realleged and
false and fraudulent BLMIS trade blotters to be made and kept and
COUNT FIVE
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51. Between in or about September 2006 and on or about
wl11Eully, 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)
3~, aud 4:: through 43, above, are hereby repeated, realleged and
about December 11, 2008, in the Southern District of New York and
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did :ake and receive therefrom such matters and things, and did
COUNT SEVEN
(Wire Fraud)
~3, and 42 through 43, above, are hereby repeated, realleged and
aDoLt December 11, 2008, in the Southern District of New York and
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New 'York.
COUNT EIGHT
3" and 42 through 43, above, are hereby repeated, realleged and
0;: New York, the United Kingdom, and elsewhere, FRANK DIPASCALI,
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outside the United States, and funds from a place outside the
teo wit, fraud in the sale of securities, mail fraud, and wire
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)
3), and 4~: through 43, above, are hereby repeated, realleged and
ad\'j ser registered with the SEC. As such, BLMIS was subject to
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about January 26, 2006, employees of the SEC took the voluntary
c.ients 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)
A.: I don't believe so. For the year, no. For any
particular period of time, definitely, but not over the
course of a year. No, I don't remember one.
Specification Two
(Page 87, Lines 1-9)
Specification Three
(Page 124, Lines 3-18)
Specification Four
(Page 73, Lines 1-9)
Specification Five
(Page 71, Lines 12-14)
Specification Six
(Page 104, Line 23 - Page 105, Line 9)
~,: Who are they. I guess there [are] about 20, the larqest
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)
SDecification Eight
(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 LLCi and (c)
employed by DIPASCALI.
about August 10, 2009, in the Southern District of New York and
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wiL.full'!, and knowingly, did attempt to evade and defeat a
~he United States of America for calendar years 2002, 2005, 2006
In,l) bank accounts held in the name of nominees and filing and
Ircrnne 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
2002 $0 $327,121 $3,254,163 $889,745
2005 $999,999 $314,278 $2,265,734 $452,791
2006 $0 $676,150 $2,559,703 $192,996
2007 $0 $867,367 $4,050,810 $522,622
FORFEITURE ALLEGATION
(Offenses Constituting Specified Unlawful Activity)
§ ~JSLa' ~L) (C) and 28 U.S.C. § 2461, all property, real and
ploperty.
(Title 18, United States Code, Section 981 (a) (1) (C),
and Title 28, United States Code, Section 2461.)
FORFEITURE ALLEGATION
(Money Laundering)
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'~:oUl1L E:ight of this Information, FRANK DIPASCALI, JR., the
Un2-ted States Code, Section 982(b) and Title 21, United States
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des,::~:ibed above.
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