To keep regulators at bay, he helped create a random-number generator to make it look like trades of various sizes and prices were being carried out in different time zones.
DiPascali, a resident of Bridgewater, New Jersey, also helped build a “phantom” computer trading platform in case an investor, auditor or regulator requested to see the firm’s trading in action.
In the event of a surprise visit, one employee was supposed to enter fake trades on a computer screen while another hid in a nearby office playing the role of a counterparty from a linked computer. They tested the system, the SEC said, without specifying whether it was used. To avoid detection, Madoff closed accounts of investors who worked at sophisticated financial institutions.