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Using Yiddish Word For Screwing Only One Of The Many Colorful Ways That Bernie Madoff Made Clear He Was Up To No Good

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Even if, for argument's sake, you were able to convince yourself that "schtupping," Madoff's name for the placing of fake trades, was nothing to be alarmed about, some of this, no doubt, should have given you pause.

"He was never ever, ever...private...It was an open environment, and at times he didn't know when to shut the hell up. At times, I cringed when he said things," Mr. DiPascali said. He said that he would have to remind Mr. Madoff to be more discreet, because "he was a frantic lunatic at times…."

The gist of the plan devised by Mr. Madoff was first to convince regulators that the firm only managed finances for a "couple of dozen" customers, rather than the "thousands" that they actually had, Mr. DiPascali told jurors. Mr. Madoff also decided to create phony documents to give the impression that the firm was a specific type of brokerage, known as an "RVP/DVP," that executed trades but didn't hold customers' cash or securities. It was "180 [degrees] from" the way the firm had presented itself previously, Mr. DiPascali told jurors during his third full day of questioning by a federal prosecutor in Manhattan federal court. In order to create the illusion that the firm wasn't holding customer cash or securities, Mr. Madoff decided that existing documents needed to be reconstructed to include the names of banks, Mr. DiPascali testified on Thursday, to indicate who was, in fact, holding the purported assets. When asked which bank names to list at the top of the new documents, Mr. Madoff instructed his staff to "make them up," said Mr. DiPascali. "'You could put Chase or you could put J.P. Morgan or you could put Bank of America, '" Mr. DiPascali recalled Mr. Madoff saying. Ultimately, Mr. Madoff thought it would be smarter to use names of foreign banks, reasoning that "government employees" were "probably not allowed to make international calls" to follow up, said Mr. DiPascali.

Earlier Thursday, Mr. DiPascali testified that the Madoff firm allegedly had a name for the process of entering fake trades in some customer accounts after the fact: "schtupping." He said the firm had a number of reasons for engaging in the process, the word for a Yiddish vulgarity. For some customers, fake losses were entered to reduce tax liabilities. For others, the phony trades created the appearance that smaller investors, or "little people," had made roughly the average of what all Madoff investors had made, said Mr. DiPascali.

Madoff Fumed At SEC Letter [WSJ]