The AUSA, Marc Litt, and DiPascali's attorney, Marc Mukasey ( a former AUSA himself, son of former AG Michael Mukasey, now a defense attorney with Bracewell and Giuliani), were clearly caught off guard by the Judge's decision and scrambled mightily to change his mind, to no avail. Some of their unconvincing arguments:
From Mukasey: The family needs him. His client supports his elderly mother and four children, including one starting law school this week, but won't flee because he has no job and the Government has all his assets and he has to submit a detailed spending plan every month. (So how is he going to support his mother (who doesn't live with him, but with a sister)and four children?)
Mukasey: Every month we report to the government the amount of money he is spending. They are keeping him on a tight leash and he is abiding by that. He has almost no assets that are not forfeitable. So as soon as the government moves to freeze the bank accounts and seize the bank accounts, he is not going to have disposable income.
Later on:
MR. MUKASEY: He is the financial provider to his family.
THE COURT: Is he working, though?
MR. MUKASEY: No. But I think he is certainly taking care of his family, the four kids and the girl in law school and the boys that are home for the summer.
Next argument by Mukasey: Three people are signing their names to a $2.5 million bond and one of his sisters is putting up her house which has equity of $400k. The Judge responds: He just admitted defrauding thousands of people. Three more is going to make a difference? He just agreed to forfeit $170 billion. $400k is going to keep him here?
From Litt: The documents are so intensive they take up half of one floor of an office building and it would be so inconvenient for the agents to have to bring documents to him rather than have him come down to the office building. (Like they can't scan the documents and bring a computer to the jail? )Oh, and Bernie's computer system was a dinosaur and only Frank can help them figure out where everything is on it and how to retrieve things.
The Judge:
You have to take him out in order to bring him to the FBI. Look, we are all experienced with cooperators. We all know there are many cooperators who are in custody who are able to cooperate and meet with law enforcement officials
and engage in cooperation. He is not doing anything (sic)activity. He is not wearing a wire and going out. I am not sure I am persuaded that he needs to be out to be able to effectively cooperate....That is not really the consideration of 3143. It doesn't say or if the government thinks it would be more convenient to have a person out.
The Judge says the bottom line is that the test for bail pending sentencing is the defendant should be detained unless the court finds clear and convincing evidence the defendant is not a flight risk or danger to the community.
In plain English (my translation)the Judge says: Look, the guy is facing a life sentence, he just admitted being a fraudster for the past 20 years and lying his as* off to the SEC in 2006. And I'm supposed to trust him to show up because he had an epiphany 8 months ago that the gig was up? He's looking at life. Even with cooperation, he may or may not make a dent in that sentence. What's to prevent him from deciding in a few months he's changed his mind?
His actual words:
Mr. DiPascali has admitted to a 20-year period of fraud in which he committed perjury to the SEC under oath. He maintained and manufactured false books and records that were designed to mislead regulators and auditors. He issued by his own account and the government's account literally thousands or even millions of statements to investors that were designed to mislead them and lull them into maintaining investments they had made or increasing the investments that they had made. The money laundering that is set forth in one of the accounts describes a fairly massive-scale scheme that continued as recently as December of 2008.
....So I think all of that suggests to me that Mr. DiPascali is not a good bet. I think the argument that I anticipate is that, Well, Mr. DiPascali understands that if he violates the terms of his bail then his cooperation agreement will be ripped up and any hope he would have for a sentence below the guidelines would be greatly diminished. I understand that as well. But 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.
....I am not persuaded by clear and convincing evidence that Mr. DiPascali is going to be here at the time of sentencing given the monumental sentence he is facing and given the amount of cooperation that is going to be needed to put a dent into that sentence.
The Judge did say both sides could come back with a better bond package and he'd take another look. But, for the meantime, DiPascali is joining Cameron Douglas at the Metropolitan Correction Center.
Because DiPascali's cooperation is so intricate the court didn't even set a sentencing date. The parties suggested there be a status review in May, 2010.
