Solidifying Operations
With all this success, Bernie relocated to three fl oors in the new prestigious Lipstick
Building on Third Avenue in mid-Manhattan. The red-granite, 34-story, receding
oval skyscraper is considered an architectural masterpiece and, as the nickname
implies, looks like a tube of lipstick. The main entrance to Bernie’s business was
on the eighteenth fl oor, which housed a conference room, information technology
and administrative offi ces, Ruth’s offi ce, and the Cohmad Securities offi ce. A state-of-the-art, glass-enclosed trading fl oor was on the nineteenth fl oor, along with
offi ces for Bernie, his brother Peter, and his sons Mark and Andrew. Bernie’s traders
made 15,000 trades a day, accounting for fi ve percent of total daily business on the
NYSE. The illegal investment advisory business was on the seventeenth fl oor, where
DiPascali managed a dozen employees behind locked doors with signs noting “Do
Not Enter” and “Do Not Clean.”26 Their operations were so secretive that Bernie’s
personal secretary of eight years did not know he managed an investment fund until
reading about it in the Wall Street Journal.
Bernie’s company owned two computer servers, “House 05” for the legitimate
business and “House 17” for the illegal business. In the early 1990s, Jerome
O’Hara and George Perez were hired to develop computer programs and maintain
the “House 05” server. Upon earning the trust of Bernie and DiPascali, they were
assigned to manage the “House 17” server on the mysterious seveneenth fl oor. They
became responsible for creating fraudulent client statements.27
Around the same time, Horowitz retired as Bernie’s auditor and personal accountant.
Horowitz gave the business to David Friehling, his son-in-law. Friehling
quickly became a key member of Bernie’s scam. Friehling gave Bernie signed blank
SEC forms to complete; when questioned about his auditing duties, Friehling lied to
the American Institute of Certifi ed Public Accountants (AICPA).