U.S. District Judge Richard Sullivan rejected a prosecutor's recommendation that Frank DiPascali Jr., a former Madoff assistant, remain free on $2.5 million in bail pending sentencing, ordering that he be jailed because the judge considered the witness a flight risk, The Washington Post reported Thursday.
Legal experts contacted by the Post questioned the effect Sullivan's decision would have on other witnesses as the federal government continues its investigation of the Madoff scheme and other cases arising from the financial crisis.
"The collateral consequence of that denial can create a chilling effect on cooperating witnesses," said Charles Ross, a white-collar criminal defense attorney in New York who represents a former Madoff Investment Securities employee. "Your freedom while providing cooperation is a very, very important consideration to witnesses coming forward."
Sullivan did leave open the possibility he would consider a revised bail agreement, which could free DiPascali before he is sentenced, the Post said. DiPascali, 52, pleaded guilty to 10 felony counts and has been a key prosecution witness since the scandal broke in December. He was in court Tuesday, testifying about how he and others helped Madoff perpetuate the fraud that bilked billions from investors.
Thomas M. Durkin, a partner with the law firm Mayer Brown and a former federal prosecutor, said he didn't think Sullivan's decision would have a big impact on future financial crimes.
"You may just decide to delay your guilty plea a little bit," he said. "If you are guilty in this kind of case, your only hope of minimizing your sentence is by cooperating."