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  • Louis Lanzano / The Associated Press

    Bernard Madoff

  • Louis Lanzano / The Associated Press

    Bernard Madoff arrives at Manhattan federal court in New York on March 12, 2009 where he pleaded guilty to 11 felony counts related to his Ponzi scheme.

  • Bebeto Matthews / The Associated Press

    Annette Bongiorno, center, who ran the investment advisory unit that was central to Bernard Madoff’s fraud scheme, is led from federal court in New York after she and four other aides of the imprisoned former financier were convicted on Monday.

Five former Madoff aides convicted in mammoth Ponzi-scheme trial

Published: Tuesday, Mar. 25, 2014 - 12:26 am

Five former aides to Bernard Madoff who spent decades working for his firm were found guilty of helping run the biggest Ponzi scheme in U.S. history, a $17.5 billion fraud exposed by the 2008 financial crisis.

The three men and two women, hired by Madoff with little financial experience, were convicted on all counts. The defendants failed to persuade a federal jury in Manhattan they were ignorant of the fraud despite being part of the inner circle at his New York-based firm.

Hatched in the 1970s, Madoff’s fraud targeted thousands of wealthy investors, Jewish charities, celebrities and retirees. It unraveled in 2008 when the economic crisis led to more withdrawals than Madoff could afford to pay out. In addition to $17.5 billion in principal, it erased about $47 billion in fake profit that customers thought was being held in their accounts.

Monday’s verdict, after five months of testimony and four days of deliberations, is a major victory for the U.S. government, coming in the only criminal trial brought in the five years since the scam was revealed. Madoff refused to cooperate with prosecutors.

Some clients learned they lost their life savings after Madoff’s confession and arrest on Dec. 11, 2008, leading to criticism of regulators who repeatedly overlooked the scam. Madoff, 75, pleaded guilty the next year and is serving 150 years in a North Carolina prison.

Prosecutors began probing Madoff’s highest-ranking employees soon after his arrest. While the con man claimed to have carried out the fraud alone, several of his former workers later pleaded guilty, including his ex-finance chief, Frank DiPascali, who testified at the trial as the government’s key witness.

The defendants are Annette Bongiorno, who ran the investment advisory unit at the center of the fraud; Joann Crupi, who managed large accounts; Daniel Bonventre, the ex-operations chief of Madoff’s broker-dealer; and computer programmers George Perez and Jerome O’Hara, accused of automating the scam as it grew rapidly in the 1990s.

“As the jury unanimously found, these five defendants played crucial roles in constructing and maintaining the house of cards that was the Madoff investment fraud,” Manhattan U.S. Attorney Preet Bharara said in a statement. The convictions “demonstrate what we have believed from the earliest stages of the investigation: this largest-ever Ponzi scheme could not have been the work of one person,” Bharara said.

Some of the defendants lowered their heads as the verdict was read. Crupi clasped her hands while Bongiorno wrote on the verdict sheet, nodding as each count was read.

Testimony began in October with industry experts, accountants, tax employees, federal agents and former clerical staff who worked at Bernard L. Madoff Investment Securities’s offices on three floors of a midtown Manhattan skyscraper. They all gave evidence against the former employees, some of whom worked for Madoff since the 1960s and left extensive paper trails found in storage boxes, filing cabinets and 1980s-era computer systems.

The defendants were accused in a 31-count indictment of conspiring to use millions of fake account statements and false trade confirmations to trick customers into believing they owned shares in the world’s biggest companies. Instead, prosecutors said, the victims’ money was used to enrich the firm’s wealthiest clients, give conspirators exorbitant pay and bonuses and keep the Ponzi scheme afloat.

Madoff’s scam, disguised as an exclusive investment-advisory business, was made popular by its steady returns, even when the economy struggled. His extensive ties on Wall Street and in New York politics added to his allure.

The trial made public the greatest detail yet how Madoff was able to dupe the Securities and Exchange Commission and other investigators during audits. The defendants banded together during late-night sessions to create hundreds of fake statements showing new trading strategies and fake reports showing their securities holdings, witnesses said.

The former colleagues got rich off the fraud, benefiting from backdated trades in their personal investment advisory accounts, as well as inflated salaries and bonuses intended to buy their loyalty and silence, prosecutors said. They used the stolen cash to buy mansions, yachts and beach homes and pay for country club memberships and private schools, prosecutors said.

The jury rejected claims by the five former aides that Madoff duped them into carrying out his fraud by giving them tasks that prevented them from seeing the big picture.





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