Five former employees of disgraced con artist Bernard Madoff were were found guilty Monday of helping to cover up the biggest financial fraud in U.S. history. The six month trial — one of the longest in the storied history of Manhattan federal court — was the first to stem from the massive fraud revealed in December 2008 when Madoffs Ponzi scheme ran out of money and he was arrested. He pleaded guilty to avoid a trial and is currently serving a 150-year prison sentence for spearheading the $20billion con. The case focused on five people who prosecutors said helped him carry out the fraud. They were portrayed as telling an elaborate web of lies to help enrich themselves and cheat investors out of billions. Prosecutors unveiled hundreds of exhibits and showcased dozens of witnesses to try to prove charges against Annette Bongiorno, Madoffs longtime secretary; Daniel Bonventre, his director of operations for investments; JoAnn Crupi, an account manager; and Jerome OHara and George Perez, both computer programmers. Each was convicted of conspiracy to defraud clients, securities fraud, falsifying the books and records of a broker dealer. Prosecutors obtained convictions on all 33 charges, though only one defendant was charged in some counts. Bongiorno and Bonventre testified for several days in their own defense. They insisted they were victims of Madoffs fraud as well, losing millions of dollars they had invested with him because they believed in and trusted him. Bongiorno, 65, told the jury he once asked how the firm was making money when everyone else was losing money. Madoff told him they could make money in a down market by shorting stocks, he recalled, adding that he believed him. Clients lost nearly $20 billion, but court-appointed trustee Irving Picard has recovered much of the money by forcing those customers who received big payouts from Madoff to return the funds. When the fraud was revealed, Madoff admitted that the nearly $68 billion he claimed existed in accounts was actually only a few hundred million dollars, and those assets were immediately frozen. Frank DiPascali, Madoffs now-infamous former finance chief, was the main prosecution witness, along with five other insiders who pleaded guilty and agreed to cooperate. At times, however, their testimony seemed to support the defendants claims that they were kept in the dark. DiPascali acknowledged that he lied to Perez and OHara to trick them into working on the projects that he needed them to work on. Larry Krantz, an attorney representing Perez, asked him if he was manipulating them so they could participate in the massive fraud without knowing it. Yes, DiPascali answered. In their closing arguments, defense lawyers hammered at the notion that their clients were victims too, losing tens of millions of dollars they had entrusted to their boss. Attorney Gordon Mehler said his client, OHara, was used, abused, manipulated, lied to, snookered and bamboozled by two of the greatest criminal masterminds in history. Bongiornos attorney, Roland Ripoelle, said Bongiorno saw $50 million of what she thought was her own money but was really Bernie Madoffs monopoly money go up in smoke. ... Ms. Bongiorno relied on Mr. Madoff, and she was fooled by him. Attorney Eric Breslin said his client, Crupi, was a victim of the lies that they told her to her face, year after year. The verdict was delivered after the jury deliberated for about 20 hours over a period of two weeks. The panel was down to 11 jurors after one juror became sick during deliberations and was dismissed. The defendants were described by prosecutors as necessary players in Madoffs fraud. They said Bongiorno, hired in 1968, and Crupi, hired in 1983, used old stock tables to fabricate account statements and other fake records that kept the Securities and Exchange Commission in the dark. The government said they also rewarded themselves with tens of millions of dollars in salary and bonuses, including $2.5 million for a beach house for Crupi as the con was falling apart while the recession took hold during 2008. Prosecutors said OHara and Perez developed a software program that automated the fraud, generating information out of thin air, as one put it. The Ponzi scheme nearly ran out of money at least twice since the early 1990s before finally collapsing during the 2008 financial crisis. Ponzi schemes can only be sustained when money is constantly coming in. The new money is used by those running the con to give funds to legacy investors making withdrawals from their accounts. Once the new funds stop coming in the whole thing collapses - which is exactly what happened to Madoff as 2008 drew to a close. Free-falling markets caused investors to both stop investing in his supposedly well-performing service and also demand their money as they pulled out of equities. They are named for Italian con artist Charles Ponzi, who defrauded Americans of millions in the 1920s. He was eventually deported for his crimes. Statements claimed assets of nearly $70billion, but there was in reality only a couple hundred million. During jury selection, prospective jurors were told that they might hear references to big names like Steven Spielberg, Sandy Koufax, Kevin Bacon and Zsa Zsa Gabor. Hundreds of exhibits and thousands of pages of materials were put before jurors. Also mentioned were Madoffs relatives, including his brother, wife and two sons. A third son committed suicide two years after the fraud was revealed. Madoff, 75, is serving his sentence at a federal lockup in North Carolina.
Posted on: Mon, 24 Mar 2014 21:38:13 +0000