US District Judge Richard Sullivan’s unexpected decision to jail Frank DiPascali, the former lieutenant to Bernard Madoff, before sentencing is highly unusual and reflects the extraordinary size and scope of the harm caused by the $65bn Ponzi scheme, legal experts said.
After Mr DiPascali pleaded guilty to 10 criminal charges, both prosecutors and his attorney, Marc Mukasey, had urged the judge to release the 52-year-old father of four on $2.5m bail secured by pledges from three relatives and the equity in his sister’s house.
Both sides argued that it would be much easier for Mr DiPascali to work with the FBI, the Securities and Exchange Commission and civil lawyers if he were free to examine records and work late in the night. Mr Mukasey also told the judge that Mr DiPascali and his family were not prepared for him to be thrown behind bars immediately.
But Judge Sullivan said he could not be sure that Mr DiPascali would show up for sentencing because he would be facing a legal maximum of 125 years in prison and a likely life sentence. He noted that Mr DiPascali had pleaded guilty to lying to thousands of clients and helped falsify millions of records over the course of two decades.
“I don’t think I can overlook the conduct he admitted to today,” said Judge Sullivan, a former prosecutor who has handed down tough sentences to other co-operators despite their work with the government.
Most white-collar defendants remain free after conviction – even when they have not agreed to co-operate with the government.
Judge Sullivan’s decision could delay the prosecution’s work, other lawyers said, because Mr DiPascali will have to be taken in and out of jail to work with documents and computers. It could also lead other potential co-operators in the case to delay entering a guilty plea so that they can stay free as long as possible.
But Judge Sullivan may well have been mindful for the outrage that greeted Judge Denny Chin’s initial decision, later reversed, to allow Mr Madoff to remain out of jail after his arrest.
“Judge Sullivan was not going to subject himself to the criticism directed at Judge Chin for permitting Mr Madoff to remain living in luxury,” said Jacob Frenkel, a former federal prosecutor. Steve Peikin, a former federal prosecutor, said: “This is a case that doesn’t have a lot of precedent in terms of scope and magnitude of harm. You can understand how in a case like this he might be particularly cautious.”
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