Madoff Secrets Go to the Grave

Lucien Capheart / Getty Images Jeffry Picower, found dead at the bottom of his swimming pool yesterday, was Suspect Number One in terms of what happened to Madoff’s billions. Now, Allan Dodds Frank asks, will they ever find the money?

Before he was found in his swimming trunks, dead at the bottom of the pool at Casa Del Sud, his $33 million oceanfront mansion in Palm Beach, Jeffry Picower held the keys to Bernard Madoff’s vault.

Investigators say Picower was the most important witness in the investigation of Madoff’s crimes and more importantly, they believe he was Madoff’s most valuable accomplice, a truly equal co-conspirator.

The Picower Foundation rained money for medical research and education-related causes. His wife liked to tell friends: “Jeffry makes the money; I get to give it away.”

When investigators wonder where Madoff’s money went, they keep asking: “Why did Picower get more than one-third of the more than $20 billion that is missing from Madoff investors? How could Bernie have allowed Picower to take out $7.2 billion more than he invested, unless Picower was money-laundering the proceeds for Bernie?”

With the possible exception of Madoff’s brother Peter, the 67-year-old Picower remained co-conspirator Suspect Number One, in spite of his lawyer’s assertion that Picower was simply Bernie’s biggest victim.

“Picower made off with a totally grotesque amount of money. Unlike many other people, I don’t know that he paid taxes on all of it,” an investigator told The Daily Beast. “Unless Bernie showed him his printing facility where he was making counterfeit, Picower had to know the money was stolen, those were the only choices.”

Now investigators may want to question Picower’s lawyer, Princeton and Harvard Law graduate William D. Zabel, of Schulte, Roth & Zabel. A prominent New York wills, trusts and estate lawyer, Zabel has represented Jeffry & Barbara Picower and their foundations for at least two decades. On Sunday, Zabel told several news organizations Picower was in poor health, suffering from Parkinson’s disease and “heart-related problems.”

With Jeffry Picower gone, the inquiries will focus on how and why trusts, corporate entities and other legal instruments were used by Picower to move money. Should the bankruptcy trustee win a court ruling that he is entitled to recover money from Picower, the money hunt will be on in full force and Zabel could become a witness.

Courtesy of Allan Dodds Frank “Then the question comes, where is it?” Says the investigator. “If it turns out it moved around, he set up this trust, he set up that trust. The money went to 17 different countries. Who set up the trusts? Who coordinated the movements?”

Zabel also told various news organizations that there has been progress in settlement negotiations with the bankruptcy trustee. Zabel did not return the calls from The Daily Beast so we could not confirm that the trustee’s representative viewed Picower’s initial settlement office as so low that it would not be seriously considered.

For the U.S. Attorney’s Office, Picower’s untimely death means one criminal case disappeared and the investigation just got harder. And the new U.S. Attorney’s Oct. 6 appointment of William Zabel’s son Richard as head of the criminal division just got messier, despite the younger Zabel’s recusal from the Madoff case.

Now there will be even more urgency by prosecutors when they ask U.S. District Judge Richard Sullivan Wednesday to reconsider releasing on bail Frank DiPascali Jr., the former Madoff chief financial officer who actually has been co-operating in the criminal investigation.