Bernie Madoff is the finance world’s closest thing to Tuberculosis, just when we think the news cycle has washed itself clean of the Ponzi king, he re-emerges.
It reminds me of the journalist Sam Kriss’s description of Tony Blair’s semi-frequent appearances on the news: “Tony Blair rises every couple of months, like a bubble of swamp gas. First there’s an uneasy buried rumbling, then small tremors shake the surface, and then suddenly he bursts through, a gassy eruption stinking of farts and sulphur. It doesn’t matter how many rounds you fire into his shambling frame; he just won’t die.”
The Madoff scandal lurched back into the news recently, as Frank DiPascali, a key figure in the both the Ponzi scheme and the trial his of former associates, died of lung cancer last week.
Making fun of the recently deceased is like shooting fish in a barrel. So instead we’ll proffer this little titbit from a brief profile of DiPascali in the New York Times Magazine with the perfect anecdote. We hope that it’ll serve as a kind of eulogy for the man.
“One morning years ago, an auditor from the firm KPMG paid a visit to Bernard L. Madoff Investment Securities’ offices at 885 Third Avenue, the sleek, tubular Midtown office tower known as the Lipstick Building. The auditor informed Frank DiPascali Jr., Madoff’s de facto chief financial officer, that he was conducting due diligence for a major European bank and asked to see a trade ledger — a roster of Madoff’s transaction records — for the investment fund.
The trade ledger should have backed up what Madoff told his investors he was doing with their money: periodically buying and selling large volumes of blue-chip stocks and, in the intervals between those trades, parking the cash safely in government securities. What Madoff was actually doing, of course, was using some investors’ money to pay “profits” to other investors, which is the classic Ponzi-scheme model, executed at a scale no one had dreamed of before. As no trading was being done, no trade ledger existed. And if DiPascali couldn’t produce one for the auditor, the whole scheme would be exposed.”
At this point, most people would think they were finished, gone, dead in the water; that the jig was up. But not DiPascali:
“DiPascali made a phone call, and his staff quickly put together a fake ledger on a computer to reflect the billions of shares the accounts in question supposedly held. But the document, literally hot off the office printer, needed its recent origin disguised. As DiPascali later told the story, he “did a little soft shoe” and chatted to distract the auditor in a conference room while his staff quickly cooled the newly minted ledger in an office refrigerator, then tossed it around ‘like a medicine ball’ to give it the patina of age and hard use. DiPascali handed it over, and the auditor left, satisfied.”
Frank DiPascali, ladies and gentlemen. A true master of the take.
Read the original piece on AccountingWEB's sister site Going Concern.
