Prosecutors unveiled criminal charges against five long-time employees of Bernard Madoff, alleging that they played a pivotal role in Madoff's $65 billion Ponzi scheme that spanned nearly four decades - two decades longer than previously admitted by Madoff. A superseding 33-count indictment was filed against Madoff's former operations director Daniel Bonventre, back office employees Annette Bongiorno and Joann Crupi and former computer programmers Jerome O'Hara and George Perez. The indictment added charges from the original November 2010 indictment, and also dated the conspiracy back to at least the early 1970s. United States District Court Judge Laura Taylor Swain set a trial date for the accused for October 2013.
According to the 153-page indictment, each of the five defendants had worked for Madoff for at least twenty-five years, with Bonventre and Bongiorno having served at Bernard L. Madoff Investment Services ("BLMIS") since 1968. While Madoff had originally claimed that he alone had been responsible for perpetrating the massive fraud, authorities doubted those claims due to the sheer size of operations.
Each played an active role for years in helping Madoff cover up the fraud. This included the development of computer programs by O'Hara and Perez that contained fraudulent information designed to generate fictitious reports and evade suspicion from regulators. Bonventre allegedly falsified financial statements and other documents in order to obtain hundreds of millions of dollars in loans from financial institutions, as well as arranging for his son to obtain a "no-show" job by providing false information to the Department of Labor. Bongirono and Crupi managed hundreds of accounts on the investment advisory side of the business, "executing" backdated trades in this accounts on paper only to achieve rates of return pre-determined by Madoff.
Additionally, the indictment provides a new glimpse into the days leading up to the shocking discovery that Madoff had been orchestrating the largest Ponzi scheme in history. In early November 2008, approximately a month before Madoff came clean to his two sons, Crupi prepared a report revealing that the amount of outstanding investor redemption requests outnumbered available cash on hand by a factor of three. After Bonventre became aware of this he contacted a financial institution seeking a $200 million loan that would be collateralized by federal bonds held by a Madoff investor. While this succeeded in allowing the scheme to continue several more weeks, during which time it would take in nearly $50 million more from new investors, it became clear in early December that the scheme was out of time. Crupi then began rehearsing her story for law enforcement officials, and prepared $300 million in checks to be sent out to select clients.
Including Madoff, eight people have pled guilty to various criminal charges for their role in the scheme since its discovery in December 2008. It is expected that several of those participants may testify at trial should any of the five defendants decide not to plead guilty.
A copy of the indictment is here.