* DiPascali has cooperated with prosecutors
* Could face up to 125 years prison
* Little or no prison possible, legal expert says (Adds comment, details, other defendants, byline)
By Jonathan Stempel
NEW YORK, Feb 19 Bernard Madoff's top lieutenant may get "extraordinary" leniency from prosecutors for his help in unraveling the largest Ponzi scheme on record.
In a letter released on Friday, federal prosecutors in New York praised the efforts of Madoff associate Frank DiPascali in providing "substantial assistance to the government in its investigation and prosecution of others."
DiPascali faces up to 125 years in prison, but "it is likely his cooperation will result in an extraordinary letter" justifying a lower sentence, according to the 10-page letter to U.S. District Judge Richard Sullivan, dated Dec. 14, 2009.
"The word 'extraordinary' is extraordinary," said James Cohen, a professor at Fordham University School of Law and specialist in criminal proceedings.
"It's extremely uncommon for the government to use that term. It says to me the government is asking for no jail at all."
Most of the letter was blacked out, although at least some of the redacted text appeared to describe DiPascali's "historical and prospective cooperation" with the government.
Prosecutors said release of that information could result in "significant harm" to their criminal investigation.
DiPascali had worked for Madoff's firm since 1975, and eventually rose to become its chief financial officer. He pleaded guilty last August to 10 charges including securities fraud, money laundering, conspiracy and perjury.
Sullivan at the time denied bail, over the objections of DiPascali's lawyers and prosecutors who thought this could make it harder for the defendant to cooperate.
Last week, Sullivan ordered the defendant's release on $10 million bond, secured by assets of family members and friends, saying it was sufficient to ensure DiPascali would not flee.
He nonetheless subjected the defendant to home confinement with electronic monitoring, and tight oversight by federal agents.
Madoff's former accountant, David Friehling, has also pleaded guilty in the case, while computer programmers Jerome O'Hara and George Perez were criminally charged in November.
Others are also being investigated, including Madoff's brother Peter.
Cohen said prosecutors' call for leniency "puts extraordinary pressure" on Sullivan to hand down a low sentence, though he expects some prison time to be involved.
"A low sentence would send a message that even someone who plays a major role in one of most the significant frauds in history can expect no serious jail time in exchange for cooperation," he said.
Madoff is serving a 150-year sentence in a North Carolina federal prison.
The case is U.S. v DiPascali, U.S. District Court, Southern District of New York, No. 09-00764. (Reporting by Jonathan Stempel, editing by Leslie Gevirtz and Ted Kerr)