Bernie Madoff's Deputy Said to be 'Ratting Down'

Fortune is reporting today that a cooperating witness has finally emerged in the Bernie Madoff mess--a key aide by the name of Frank DiPascali.

Seems that DiPascali is "ratting down"--that is, coughing up names not of other people in the Madoff organization or family involved in the ripoff (which would be "ratting up" in cop parlance) but rather some of Madoff's clients.

According to the magazine, DiPascali has told prosecutors that he is

..prepared to testify that he manipulated phony returns on behalf of some key Madoff investors, including Frank Avellino, who used to run a so-called feeder fund, Jeffry Picower, whose foundation had to close as a result of Madoff-related losses, and others. If, for example, one of these special customers had large gains on other investments, he would tell DiPascali, who would fabricate a loss to reduce the tax bill. If true, that would mean these investors knew their returns were fishy.

Well, not necessarily. It could also mean that they thought the returns were genuine and just wanted phony documents.

If these presumably smart people knew that their returns were "fishy" -- in the sense of being fictitious -- why would they stay with Madoff and not just pull out?

Fortune says that "it will likely come as a huge relief to the Madoff family that DiPascali is telling prosecutors they were not participants in the scam. After all, nobody, apart from Bernie Madoff, is better positioned to describe who took part. But it's worth remembering that such a statement represents less than a full exoneration."

Right. It may also be baloney.