Dipiscali's Bail Motion

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK UNITED STATES OF AMERICA

v. FRANK DIPASCALI, JR., Defendant.

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09 Cr. 764 (RJS) ECF Case

DEFENDANT FRANK DIPASCALI'S MOTION FOR RECONSIDERATION OF BAIL CONDITIONS Defendant Frank DiPascali, Jr., by his attorneys, Bracewell & Giuliani LLP, Marc L. Mukasey and Craig S. Warkol, of counsel, respectfully moves this Court to enter an Order admitting Mr. DiPascali to bail in accordance with conditions set forth herein.1 As set forth below, clear and convincing evidence exists that, upon satisfaction of the new combination of conditions proposed herein, Mr. DiPascali will not pose a risk of flight, and he should be granted bail pending sentencing. I. Background A. Mr. DiPascali's Career At Bernard L. Madoff Investment Securities From in or about 1975 through on or about December 11, 2008, Frank DiPascali worked for Bernard L. Madoff Investment Securities ("BLMIS"). For his first fifteen years at BLMIS, Mr. DiPascali held a variety of jobs, lawful and legitimate, including as a research analyst, an options trader, and a person who "did whatever I was told to do around the office." Transcript of Proceedings dated August 11, 2009 ("Tr.") at 45. Without a

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The proposed Order is attached to the Government's Motion For Reconsideration Of Bail Conditions, dated October 16, 2009.

college education or formal training, Mr. DiPascali thought he was learning how the securities industry worked by observing Mr. Madoff and others. For many years, he thought that he worked at a prestigious and successful securities firm. (Tr. at 45). In the late 1980s Mr. DiPascali became involved in Mr. Madoff's fraudulent activity. Although he did not know the complete scope of Mr. Madoff's criminal conduct, Mr. DiPascali ultimately made the conscious decision to participate in Mr. Madoff's criminal activity by, among other things, falsifying account statements, lying to regulators and misleading investors. Throughout the time period of the fraud, Mr. Madoff lied to Mr. DiPascali. Mr. Madoff led Mr. DiPascali to believe that, despite the fact no trades were being executed, investors would not lose any of their funds because Mr. Madoff owned a massive portfolio of assets that he could liquidate to satisfy redemption requests if, and when, clients requested the return of their funds. As counsel noted during the prior court proceeding in this matter, Mr. DiPascali believed that: . . . no one is going to get hurt at the end because Bernie Madoff has been telling me he has assets abroad and in real estate and in commodities that are going to make sure that all the clients' money will be able to be returned. So he wasn't out there sort of ripping and robbing and stealing as you might think of it. [I]s [Mr. DiPascali] guilty? 1,000 percent. No question about it. . . . It was okay because Bernie was going to take care of it. Don't worry, Bernie will take care of it. That is how he went to sleep at night. (Tr. at 85). The belief that Mr. Madoff always would be able to satisfy redemption requests, and that clients would not lose their invested funds, brought Mr. DiPascali a degree of comfort. But in early December 2008, Mr. Madoff revealed to Mr. DiPascali that he did not have a portfolio of assets that could be liquidated to return investor funds. At that

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moment, Mr. DiPascali knew full well that the consequences of the BLMIS collapse would be cataclysmic, that investors would lose billions, and that he would likely face criminal prosecution and a significant prison sentence. B. Mr. DiPascali's Post-Madoff Conduct On December 11, 2008, federal authorities served Frank DiPascali with a grand jury subpoena. Mr. DiPascali understood immediately that he was the target of a criminal investigation. At the time, Mr. DiPascali was a man of substantial means. He had all the tools necessary for one who might be inclined to avoid a prosecution: a passport; unfettered access to over two million dollars; a 61-foot yacht capable of traveling in international waters; a time-sharing arrangement in a private jet service; and several cars. But Mr. DiPascali never considered flight. Upon receipt of the subpoena, he retained counsel, surrendered his passport to his lawyers and, a few weeks later, initiated conversations with the United States Attorney's Office for the Southern District of New York aimed at admitting his guilt and securing a cooperation agreement. Between January 2009 and August 2009, Mr. DiPascali met repeatedly with the United States Attorney's Office, the Securities and Exchange Commission, and the Federal Bureau of Investigation. In addition, he demonstrated his commitment to cooperating with the investigation by voluntarily entering into an agreement with the Government that restrained his assets and imposed strict spending limits on him and his family. He discontinued his private jet time share; surrendered his boat to the U.S. Marshal; forfeited his cars; and surrendered family heirloom firearms to the local sheriff. He also agreed to settle the case filed against him by the SEC and be forever barred from association with a broker dealer or investment advisor. See SEC v. DiPascali, No. 09-cv-07085 (S.D.N.Y.).

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On August 11, 2009, Mr. DiPascali entered into a cooperation agreement with the Government and pleaded guilty to a ten count criminal information. The Information charged Mr. DiPascali with conspiracy, securities fraud, investment adviser fraud, falsifying books and records of a broker-dealer, falsifying books and records of an investment advisor, mail fraud, wire fraud, money laundering, perjury and attempting to evade or defeat taxes. During his allocution, Mr. DiPascali admitted that, from the late 1980's or early 1990's, he "helped Bernie Madoff, and other people, carry out the fraud that hurt thousands of people." (Tr. at 44). He also acknowledged the "one simple fact that Bernie Madoff knew, that I knew, and that other people knew but that we never told the clients [or] the regulators like the SEC. No purchases o[r] sales of securities were actually taking place in their accounts. It was all fake. It was all fictitious." (Tr. at 46). Later, he confessed that, "I knew what was happening was criminal and I did it anyway." (Tr. at 52). At the close of his allocution Mr. DiPascali reiterated his intent to help the Government and stated, I know my apology means almost nothing but I hope my actions going forward with the government will mean something and I promise to dedicate all my energy to try to explain to others how this happened. I hope my help will bring some small measure of comfort to those who have been harmed. (Tr. at 55). The Court accepted Mr. DiPascali's plea and adjudged him guilty.

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C. The Prior Bail Proceeding At the conclusion of the guilty plea proceeding, the Government and the defense jointly proposed, for the Court's approval, a combination of release conditions for Mr. DiPascali. The proposed bail terms included: (a)

a $2.5 million personal recognizance bond, co-signed by three financially responsible persons and secured by $400,000 of equity in the house belonging to Mr. DiPascali's sister;

(b)

the surrender of Mr. DiPascali's travel documents, with no new applications permitted;

(c)

travel only within the Southern District of New York, the Eastern District of New York, the Eastern District of Pennsylvania and the District of New Jersey; and

(d)

regular supervision by Pretrial Services.

These conditions were offered to the Court with a mutual understanding between the Government and Mr. DiPascali that, pursuant to his cooperation agreement, Mr. DiPascali would continue to work full-time with the U.S. Attorney's Office, the FBI and the SEC, to explain all he knew about the Madoff operation and provide truthful and complete cooperation. The Court rejected the proposed conditions as insufficient to eliminate the risk of Mr. DiPascali's flight. Your Honor noted that, after a guilty plea, "there is a presumption that the defendant will be detained, remanded pending sentencing." (Tr. at 69). According to the Court, the package was "fairly symbolic and not terribly onerous in light of the other facts in this case." (Tr. at 71). The Court cited several deficiencies in the bail package. First, the Court found that Mr. DiPascali "has ample incentive to flee" because "[he] is 52 years old," "facing a maximum term of imprisonment of 125 years," (Tr. at 69), and "the [G]uidelines would be

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recommending a life term." (Tr. at 70). Second, the Court stated that the amount of the bond and the security component was ". . . completely dwarfed by the amount of restitution and forfeiture in this case. $170 billion is what the plea agreement provides for Mr. DiPascali to forfeit. So it would seem to me that a 2.5 million dollar bond thrown on top of that mountain doesn't count for much." (Tr. at 70). Third, the Court noted that although the bond co-signers "would have some moral suasion over him" there are: thousands of victims who . . . lost more than $2.5 million. So the fact that three more victims might be thrown on top of a long list of victims doesn't strike me as a terribly compelling basis to believe that Mr. DiPascali would be deterred from engaging in conduct that would constitute a violation of the terms of his bail or flight. (Tr. at 70-71). At the conclusion of the proceeding, the Court noted that it had "explained what [its] concerns are and what the burden is" and invited the parties "to renew the [bail] application" at a future time. (Tr. at 93). II.

The New Proposed Bail Package With the Court's concerns in mind, the Government and Mr. DiPascali have agreed

to an enhanced set of bail conditions that dramatically reduces, if not eliminates, any risk of flight. The new proposed bail conditions would permit Mr. DiPascali's release upon satisfaction of the following terms: (a)

execution of a $10 million personal recognizance bond;

(b)

the bond will be co-signed by nine financially responsible persons, including Mr. DiPascali's two adult children, his sister, his wife and his mother2;

(c)

the bond will be secured by approximately $2,000,000, including:

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The remaining individuals who will co-sign the bond include other family members of Mr. DiPascali's spouse. The FBI has interviewed and approved of each of these individuals as co-signors on the bond.

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(i)

three family homes with total equity of approximately $600,000;

(ii)

approximately $500,000 in retirement savings belonging to Mr. DiPascali's sister; and

(iii)

$1,000,000 from a non-family member's retirement funds;

(d)

Mr. DiPascali will remain confined to his home at all times, save for Court appearances and travel to the U.S. Attorney's Office as directed by that Office (or such other location relevant to his cooperation as the US Attorney's Office or the FBI directs him), as well as any medical emergencies;

(e)

Mr. DiPascali will be fitted with an electronic monitoring device with global positioning satellite tracking capability;

(f)

Mr. DiPascali will only be permitted to leave his residence under the escort of at least one Federal Bureau of Investigation Special Agent;

(g)

Mrs. DiPascali will surrender her travel documents and not apply for new travel documents;

(h)

routine home inspection by the FBI; and

(i)

strict supervision by Pretrial Services, including daily monitoring if practicable.

These highly restrictive conditions, combined with Mr. DiPascali's binding ties to the community, and his demonstrated intention and incentive to cooperate, demonstrate by clear and convincing evidence that Mr. DiPascali will not be a risk of flight. III. Applicable Law The law of bail is well-known to the Court. Release or detention pending sentence is governed by the Bail Reform Act of 1984, 18 U.S.C. § 3141 et seq. The Bail Reform Act "creates no general expectation of post-verdict liberty. To the contrary, it establishes a presumption in favor of detention." United States v. Abuhamra, 389 F.3d 309, 319 (2d Cir. 2004). To obtain bail after a guilty verdict, a criminal defendant must rebut this

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presumption with clear and convincing evidence that he is not a risk of flight or a danger to any person or the community. See 18 U.S.C. § 3143(a)(1). Upon presentation of clear and convincing evidence, the statute grants the defendant the mandatory right to bail. The statute provides that "[i]f the judicial officer makes such a finding, such judicial officer shall order the release of the person in accordance with section 18 U.S.C. § 3142(b) or (c)." 18 U.S.C. § 3143(a)(1) (emphasis added). This burden is not insurmountable. The presumption is regularly rebutted in cases where the defendant has foreign ties, vast resources, has refused to accept responsibility, put the Government to its proof, and, upon conviction, faced what amounted to a life sentence. See, e.g., United States v. Simels, No. 08-Cr.-640 (E.D.N.Y. 2009) (defendant convicted at trial of conspiracy to obstruct justice through witness tampering and importation and possession of illegal eavesdropping equipment, facing maximum sentence of life in prison, released post-verdict on $3.5 million bond, three co-signors, home detention and electronic monitoring); United States v. Dreier, No. 09-Cr.-85 (S.D.N.Y. 2009) (defendant convicted of multi-hundred million dollar international fraud, released after guilty plea on conditions including $10 million bond, home detention with security guards, no computer access, strict reporting to PTS and electronic monitoring); United States v. Bennett, No. 05-Cr.-1192 (S.D.N.Y. 2008) (defendant, not a U.S. citizen, pled guilty to $430 million scheme, granted bail pending sentencing, consisting of house arrest and electronic monitoring); United States v. Waksal, No. 02-Cr.-1041 (S.D.N.Y. 2003) (defendant facing 65 year sentence granted bail after guilty plea pending sentencing, and permitted to self-surrender after sentence); see also United States v. Kumar, No. 04-Cr.00846 (E.D.N.Y. 2006) (defendant pled guilty to billion-dollar fraud, released on bail

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between plea and sentencing, remained on bail until self-surrender); United States v. Warshak, No. 06-Cr.-00111, 2008 U.S. Dist. LEXIS 19443, at *3 (S.D. Ohio, Mar. 13, 2008) (defendant convicted in $459 million fraud scheme "met his burden of producing 'clear and convincing' evidence that he is not likely to flee" based on cooperation with Pretrial Services; providing personal and corporate financial information to Court; and consistent attendance in court despite knowledge of Government's request for detention); United States v. Lewis, No. 04-Cr.-103 (D.Colo. 2007) (defendant, facing life sentence after conviction on ten counts including conspiracy, mail fraud and wire fraud, released on bail pre-sentencing and permitted to self-surrender for 30-year sentence); United States v. Lay, No. 04-Cr.-25-3 (S.D. Tex. 2006) and United States v. Skilling, No. 04-Cr.-25-2 (S.D. Tex. 2006) (defendants facing 165 and 185 year terms, respectively, released after trial convictions on $5 million bonds secured by real estate, and travel restrictions); United States v. Forbes, No. 02-Cr.-00264 (D.Ct. 2006) (defendant released on $1.2 million bond and permitted to self-surrender after conviction for $3.275 billion fraud involving 119,000 victims). As the Court certainly knows, when assessing bail, judges regularly consider the Government's recommendation and consent to release a defendant pending sentencing. See, e.g., United States v. Olivares, No. S1 95 Cr. 224, 1997 WL 257479, at *1 (S.D.N.Y. May 16, 1997) (recounting prior proceedings where "[d]espite the mandates of 18 U.S.C. § 3143(a)(2) . . . the Government consented to the continuance of [defendant's] release and bail package"); United States v. Mateo, No. 05-20849-Cr., 2007 WL 81834, at *1, 2 (S.D. Fla. Jan. 8, 2007) (permitting defendant to remain free pending sentencing where "neither the government nor the probation officer is presently advocating his immediate

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incarceration" and where conditions would include "electronic monitoring to be paid for by the Probation Office"); United States v. Carretero, No. 98-Cr.-418, 1999 WL 1034508, at *6 (N.D.N.Y. Nov. 4, 1999) (observing that "post-plea release was precipitated by the joint application of the government and the defendant"). Finally, one court has noted that it "allow[s] cooperators to remain free not only because they assist the government's crime-fighting efforts (though such assistance is important), but also because the likelihood of a substantial assistance motion constitutes an additional incentive to comply with release conditions and because cooperation is sometimes a step toward rehabilitation." United States v. Mitchell, 358 F. Supp. 2d 707, 708 (E.D. Wis. 2005).3 IV. Discussion Mr. DiPascali's Community Ties, His Post-Madoff Conduct, And His Demonstrated Intent To Cooperate With The Government Establish By Clear And Convincing Evidence That If The Proposed New Bail Conditions Are Imposed, Mr. DiPascali Will Not Be A Risk Of Flight Under the proposed new bail conditions, Frank DiPascali will be virtually incapacitated. He will be confined to his home with extraordinary physical restrictions, including an electronic bracelet with GPS that would identify precisely where he is located,

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In adopting the Bail Reform Act, Congress also anticipated unusual cases and authorized the pre-sentence release of a defendant "for exceptional reasons." 18 U.S.C. § 3145(c). Though the "exceptional reasons" subsection applies largely to cases of violence, the reasoning is informative. Even in cases of violence where a defendant faces life imprisonment, bail may still be appropriate if there is clear and convincing evidence that the defendant is not a flight risk, not a danger to the community and there are exceptional reasons why detention is not appropriate. See 18 U.S.C. § 3143(a)(2). Cases involving "exceptional circumstances" will consider, among other things, "whether the defendant was unusually cooperative with the government." United States v. Sabhnani, 529 F. Supp. 2d 377, 382 (E.D.N.Y. 2007) (discussing exceptional circumstances test); Carretero, 1999 WL 1034508, at *8 (declining to "foreclose the possibility that active cooperation which benefits the government . . . may constitute an exceptional circumstance in an appropriate case"); United States v. Lippold, 175 F. Supp. 2d 537 (S.D.N.Y. 2001).

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monitored by the FBI, and granted leave only with an FBI escort. He is destitute, he lacks travel documents and he has no family, friends, property or contacts outside New Jersey. As a result of the extensive media coverage of the Madoff case, Mr. DiPascali is notorious and recognizable. And those closest to him in the world – his wife, children, sisters, and mother – would be financially and emotionally ruined if he violated the proposed new bail conditions. Moreover, Mr. DiPascali has demonstrated to the United States Attorney's Office, to the SEC and to the FBI that he wants to be, and has the potential to be, a remarkable cooperating witness. His entire life will be devoted to the task. Although he is likely facing a life sentence today under the Sentencing Guidelines, he will not flee because he is confident that his cooperation will be so substantial that it may afford him an opportunity, however brief, to return to his family post-sentence. A. Ties To The Community And Their Moral Suasion Frank DiPascali is a lifelong resident of the New York-New Jersey metropolitan area, having lived his entire life in Howard Beach, New York, and Bridgewater, New Jersey. He has no homes, no property, and no bank accounts anywhere other than New Jersey. The only family members and friends with whom Mr. DiPascali has a relationship are in the metropolitan area. Mr. DiPascali's most binding tie to the community is his family. He and his wife, Joanne, have been married for twenty-five years and have lived in Bridgewater, New Jersey, since 1986. They have four children: Dorothy (age 23), Frank (age 21), Gregory (age 18), and Michael (age 15). Michael is still in high school and lives at home.

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Mr. DiPascali is indescribably close to his children. He has been involved in countless aspects of their daily lives, including preparing meals, driving them to school, assisting them with their homework, coaching their hockey teams, and handling their bank accounts, bills, insurance, and education. He has been intimately involved in their pursuit of higher education by organizing and assisting them in their SAT and LSAT courses and studying for these tests. He has taken responsibility for researching and visiting potential colleges and law schools, and helping them with their college and graduate school applications. Mr. DiPascali's care and attention to his family extends beyond his wife and children. He is equally close to his 77-year old mother, Josephine, and his sisters, Joanne and Diane, all of whom moved to Bridgewater to be close to Mr. DiPascali. Mr. DiPascali brings his mother to her doctors appointments and attends to her daily domestic needs, including buying her groceries and making sure she has working heat and air conditioning. Joanne and Diane look to Frank for advice on matters of life and death, marriage and children, business and finances, and their day-to-day problems. Through his family, Mr. DiPascali has become deeply intertwined with the Bridgewater community. For example, since 2002, Mr. DiPascali has attended every Bridgewater Raritan High School Student Council event, including school dances, dinners, and music contests. Through Mr. DiPascali's involvement with the Student Council, he has developed close relationships with school officials which have remained strong even after most of his children have gone to college. Mr. DiPascali has attended and participated in Bridgewater-Raritan's monthly school board meetings. He also counts among his friends several Bridgewater police officers.

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The moral suasion of family and close friends as co-signers on the bond is immeasurable: The people to whom Mr. DiPascali is closest in the world would be left impoverished and homeless if he were to flee. Mr. DiPascali's sister Joanne has pledged every available asset she has, including her home and her 401(k). Mrs. DiPascali's family members have also pledged their family homes as security for Mr. DiPascali's bail. Numerous courts have cited these kinds of close family ties in finding that there was clear and convincing evidence that the defendant did not present a risk of flight. See, e.g., United States v. Alexander, No. 06-Cr-200, 2007 WL 2815205, at *2 (N.D. Ohio Sept. 25, 2007); United States v. Nelson, No. 06-Cr-25, 2007 WL 1041270, at *2 (E.D. Tenn. Apr. 3, 2007); United States v. Vigil, No. Cr 05-2051, 2007 WL 766345, at *5 (D.N.M. Feb. 16, 2007); United States v. Mikell, No. 97-Cr-81493, 2007 WL 188566, at *2 (E.D. Mich. Jan. 22, 2007); United States v. Helder, No. 05-00125-Cr, 2006 WL 4080952, at *2 (W.D.Mo. Sept. 21, 2006); United States v. Harrison, No. 05-Cr-17, 2006 WL 2523092, at *3 (M.D.Ga. Aug. 30, 2006); United States v. Mitchell, 358 F.Supp.2d 707, 709 (E.D. Wis. 2005); United States v. Hartery, 351 F.Supp.2d 14, 16 (N.D.N.Y. 2005). The co-signers have known for months the seriousness of this case. They have watched Mr. Madoff receive a 150 year sentence. They are aware of the penalties that Mr. DiPascali faces. They understand that Mr. DiPascali has only one route to avoid a life sentence and that is to be a truthful, credible and tireless cooperating witness. These cosigners believe that Mr. DiPascali is a "good bet." (Tr. at 72). They are confident that he will abide by the bail terms imposed by the Court. During the prior bail proceeding, the Court expressed skepticism about the moral suasion of the DiPascali family and friends as co-signers on the bond.

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Now, the next argument would be that the financially responsible persons, the co-signers and Mr. DiPascali's sister would have some moral suasion over him, that he would be disinclined to flee or do anything that might put them at risk, and only that might be persuasive. But in this case there are thousands of victims who many of them lost more than $2.5 million. So the fact that three more victims might be thrown on top of a long list of victims doesn't strike me as a terribly compelling basis to believe that Mr. DiPascali would be deterred from engaging in conduct that would constitute a violation of the terms of his bail or flight. (Tr. at 7071). There is no denying that Mr. DiPascali's conduct affected thousands of people. Nor is there any doubt that he is guilty of a flood of fraudulent activity. It is important to note, however, that Mr. DiPascali did not believe, "for years," as the Court surmised, that "this house of cards was going to come crashing down." (Tr. at 73). Although Mr. DiPascali knew full well that no trades were taking place, Mr. Madoff repeatedly led him to believe that Mr. Madoff owned sufficient assets such as real estate, commodities and foreign banks that were worth billions of dollars that would be able to be liquidated if investors requested the return of their funds. He "always thought that there would be a safe landing for many investors." (Tr. at 73). Indeed he was devastated when he learned that Mr. Madoff did not have sufficient assets to repay investors. Mr. DiPascali is not a person who would wantonly throw "more victims . . . on top of a long list" or someone who would shamelessly inflict losses on friends and family. (Tr. at 71). B. Mr. DiPascali's Post-Madoff Conduct Demonstrates That He Is Not A Flight Risk Since December 2008, when Mr. Madoff revealed that he did not have the assets necessary to satisfy investor redemption requests, Mr. DiPascali has demonstrated his desire to provide substantial assistance in this investigation and to see his cooperation through to the time of his sentencing.

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Mr. DiPascali had all the tools necessary for one who was inclined to flee – cash, passport, boat, plane, cars. He could have done so with relative ease at any time. Instead, over the past several months, despite knowing that he faced a life sentence and the forfeiture of substantially all of his assets, Mr. DiPascali divested himself of the means and methods one would need to flee from prosecution. The FBI has thoroughly investigated his finances and his relationships. He has no foreign bank accounts or securities accounts or other foreign assets. Rather than run from his culpability, Mr. DiPascali confronted his situation squarely. Since December 11, 2008, he has taken extraordinary steps to demonstrate his desire to cooperate and to help fix the massive problems he helped cause. Among other things, Mr. DiPascali initiated contact with the Government; initiated contact with the S.E.C.; offered his immediate assistance to help investors recoup their losses; voluntarily entered into an agreement with the Government restraining his assets; voluntarily agreed to let the Government monitor his monthly spending; voluntarily surrendered his passport; voluntarily yielded his boat to the U.S. Marshals; voluntarily terminated his contract with the jet service; spent over 100 hours in proffer sessions with the Government; and settled the investigation by the S.E.C. Mr. DiPascali's conduct in working with the Government has been exemplary. He has appeared whenever and wherever the Government requested. He has reviewed documents, disclosed information above and beyond the direct questions that were asked of him, and stayed in meetings that lasted hours on end. He has been unflaggingly honest and has accepted responsibility for his conduct, earning the trust of prosecutors, regulators and agents.

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A defendant who planned to flee in the future would not have opened his life and his home to the FBI, surrendered his passport, divested himself of all financial resources, pleaded guilty, and continued to meet with the Government. It would defy logic for him to have taken these steps, only to decide later to flee. C. The Cooperation Agreement Is An Incentive Not To Flee During the prior bail proceeding, the Court posited that Mr. DiPascali might consider flight given the potential sentence he faces even if he receives credit for cooperation: I don't think it would be irrational for a defendant faced with the kind of sentence that Mr. DiPascali is facing to decide that maybe cooperation is not going to do it. (Tr. at 72). Mr. DiPascali made his decision to plead guilty and cooperate with the Government with a thorough understanding of how the Sentencing Guidelines will apply to this matter. They will call for a life sentence. But he also made the decision with a deep and profound appreciation that both the U.S. Attorney's Office and federal judges in this District recognize and reward the unique value that cooperating witnesses bring to criminal matters. Indeed, given the scope of Mr. DiPascali's knowledge about this fraud, and the fact that he is the first person from inside BLMIS to plead guilty and cooperate with the Government in this complex case, he will be a cooperating witness with significant impact.4 Among other things, Mr. DiPascali is in a unique position to assist the Government in understanding the long evolution of this fraud, the extensive steps taken to cover it up, including the creation of false documents, and he can decipher and place into context

4

By way of comparison, Ivan Boesky, a cooperating witness in the 1980s who helped the Government unravel the then-largest securities fraud case, was released on bail following his guilty plea. See James Sterngold, "Boesky Sentencing Today To Be Closely Watched," THE NEW YORK TIMES, December 18, 1987.

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millions of pages of data that will yield massive amounts of evidence. He will also help explain how Mr. Madoff and others misled the S.E.C., a matter of great public interest. In short, we expect his cooperation to be groundbreaking. Accordingly, Mr. DiPascali approaches his cooperation with the expectation that he will be a witness whose value will be recognized by prosecutors and the Court as significant enough that he will be looking forward to his sentencing with hope and optimism, rather than seeking to avoid it.5

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Interestingly, the entirety of Mr. DiPascali's criminal conduct could have been covered with a guilty plea to one count each of conspiracy, securities fraud and perjury, subjecting him to a maximum of 30 years in prison. Indeed, in many districts, including the Eastern District of New York, that would likely be the maximum sentence he faces. And, as the Court knows, many a cooperating defendant has provided substantial assistance significant enough to reduce a potential 30 year sentence to a more manageable one. However, as a result of a longstanding practice in the U.S. Attorney's Office for the Southern District of New York that requires cooperating witnesses to plead guilty to most, if not all, chargeable crimes, Mr. DiPascali pleaded to a ten count information that charged him with conspiracy, securities fraud, mail fraud, wire fraud, investment advisory fraud, books and records violations and perjury. He thereby subjected himself to a 125 year maximum sentence, which on its face, appears far more difficult to reduce through cooperation. But Mr. DiPascali understands that even murderers facing life terms have been able to reduce their sentences through extraordinary cooperation.

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V. Conclusion For the reasons set forth above, defendant Frank DiPascali respectfully submits that the extraordinary physical restrictions imposed by the proposed new bail conditions, plus his strong ties to the community and his demonstrated intent to fulfill his obligations under the cooperation agreement, establish by clear and convincing evidence that he is not a risk of flight. Accordingly, he should be admitted to bail under the terms set forth herein. Dated: New York, New York October 16, 2009 Respectfully submitted, BRACEWELL & GIULIANI LLP

By:

/s/ Marc L. Mukasey 1177 Avenue of the Americas New York, New York 10036 (212) 508-6134

Attorney for Defendant Frank DiPascali, Jr.

cc:

Marc Litt, Esq. Lisa Baroni, Esq.

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