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"Madoff himself pleaded guilty but didn't rat anybody else out," says David Evans, an economist, financial-regulation expert and editor of FinReg21.com, who wasn't surprised that DiPascali was cooperating. "So they went down the list ... and [looked] for people who don't have the incentive of protecting family as Madoff did, and [then they did] deals that would get someone to turn and implicate other people in the scheme."
Madoff had no incentive to cooperate, says Howard Elisofon, a partner at Herrick Feinstein LLP and a former SEC enforcement attorney. "The fraud was of such an enormous magnitude that even if he had offered a high level of cooperation, he still would have been in jail for the rest of his life," he says. But others in the investment scam may be able to benefit from leniency if they implicate others. "As a general rule, someone who wants to receive leniency will want to cooperate."
Bernfeld speculates that DiPascali could assist prosecutors with information on people who worked with him on the same floor producing statements and dealing with investors, as well as Madoff family members: "I would assume he will be pressed very hard by the government in terms of family members and those with special relations with Madoff who were responsible for bringing in significant dollars to Madoff — some of whom are the subject of civil lawsuits already."
Elisofon says charges against others are likely in the works. "For a fraud of this magnitude and this duration, Mr. Madoff could not possibly have acted alone, and it seems fairly clear that he must have had various accomplices over time. This may be the first of several of many other individuals who will be charged," he says. Elisofon, who represents some of Madoff's victims, says he's hoping that others who are implicated may have a lead on where some of Madoff's hidden assets are located. "Whether or not he had any accomplices in scurrying assets away in foreign places is something that's not known," he says.
Judge Richard Sullivan remanded DiPascali into custody, rejecting the government's recommendation that he be released on a bail bond of $2.5 million, which was to have been signed by three "financially responsible" people and secured by $400,000 in equity in the house belonging to DiPascali's sister. In rejecting the bail recommendation, the judge said the size of the bail bond was symbolic and not sufficiently "onerous" to keep DiPascali from fleeing.
The 10 charges, as listed in a letter from the U.S. Attorney's Office, carry a maximum sentence of up to 125 years. Sentencing is set for May 2010.
Rebekah Carmichael, a spokeswoman for the assistant U.S. Attorney, declined to say if charges are pending against others at this point. "The investigation is ongoing," she said.