Trial Set to Begin Tuesday for Madoff Employees

Trial Set to Begin Tuesday for Madoff Employees

 Five of Bernard Madoff's closest employees are set to begin trial on Tuesday to face charges that they played key roles in assisting Madoff orchestrate the largest Ponzi scheme in history. Jury selection is set to begin Tuesday for the five, who consist of three of Madoff's most tenured employees as well as two computer programmers. The "Madoff Five," as they have been referred to, consist of long-time employees Daniel Bonventre, the firm's back-office director of operations, Annette Bongiorno, Madoff's longtime secretary, and Joann Crupi, an account manager, as well as computer programmers Jerome O'Hara and George Perez. Each of the five face a series of charges, including conspiracy to defraud, securities fraud and falsifying records of a broker-dealer, which could result in a potential prison term of several decades.

While Madoff has maintained that he acted alone in perpetrating his scheme, prosecutors will seek to paint each of Madoff Five as playing a crucial role in his scheme. In a statement announcing the arrest of Bongiorno and Crupi, Manhattan U.S. Attorney Preet Bharara provided a glimpse of the prosecution's strategy when he stated that "a house of cards is almost never built by one lone architect." This includes a collection of evidence implicating the five, including:

  • The discovery of a handwritten note in O'Hara's desk from 2006 saying "I won't lie any longer,"
  • The awarding of salary increases and bonuses to O'Hara and Perez as hush money,
  • The allegation that Bongiorno created bogus financial records for Madoff,
  • Bongiorno's management of nearly $9 billion in Madoff investor accounts,
  • Crupi's management of approximately $900 million in Madoff investor accounts, and
  • Bonventre's role in providing false reports and data to outside reviewers.

The prosecution will also be introducing the testimony of several former Madoff employees that have agreed to cooperate with the government, including star witness Frank DiPascali, Jr., who worked at Madoff's firm for over 30 years and served as Madoff's top lieutenant. DiPascali pleaded guilty to 10 felony counts, including conspiracy and tax evasion, in August 2009 and has been cooperating with the government ever since. While DiPascali pledged at his plea hearing that he "would dedicate all my energy to trying to explain to others how this happened,” he is expected to be face intense questioning from attorneys for the Madoff Five, whose focus will be to discredit DiPascali's testimony and perhaps shift the focus to DiPascali's own culpability.

According to the Guardian, Madoff's claims that he acted alone stand in stark contrast to the seven guilty pleas entered besides the Madoff Five that have been indicted. Madoff was sentenced to a 150-year prison term in June 2009 - the longest sentence handed down for a Ponzi schemer.

The indictment against the Madoff Five is available here.

For more news and analysis of Ponzi schemes, visit Ponzitracker, a blog by Jordan Maglich, an attorney at Wiand Guerra King P.L.

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