NEW YORK (Reuters) - Ponzi scheme.
Treasury bond. The Standard & Poor's 500 index. The collapse of
Lehman Brothers.
Those were among the subjects that Annette Bongiorno said on
Thursday she did not understand, despite spending more than 40 years
as one of the key employees at Bernard Madoff's investment firm.
Bongiorno is one of five former Madoff workers on trial in federal
court in Manhattan for abetting his fraud, which fell apart in
December 2008, costing investors an estimated $17 billion in
principal losses.
Facing questions from a government prosecutor about her alleged role
in concealing Madoff's multibillion-dollar fraud, Bongiorno did not
deny that she entered thousands of backdated trades in customers'
accounts, sometimes years after they had purportedly occurred.
But she said, again and again, that she was simply following
Madoff's orders, knew next to nothing about Wall Street and had "no
clue" that anything she had done was illegal.
"All the trades were backdated," she said. "I did what I was told."
Also on trial are former director of operations Daniel Bonventre,
portfolio manager Joann Crupi and computer programmers Jerome O'Hara
and George Perez.
Bonventre and Bongiorno have taken the witness stand in their own
defense, betting that the jury will accept their claims that they
were duped by Madoff into believing the business was legitimate. All
five defendants have said they were unaware that Madoff, who pleaded
guilty and is serving a 150-year prison sentence, was running a
Ponzi scheme.
During her testimony, Bongiorno said she believed Madoff was trading
stock in bulk and then deciding later how to divvy up the
transactions among his customers, a practice she thought was
permissible.
Assistant U.S. Attorney John Zach repeatedly showed Bongiorno
documents on which she had plotted out backdated trades to enter
into customer accounts, though no trading actually happened.
"You were the one who wrote all these trades in?" Zach asked.
"Yes," Bongiorno replied.
"And your testimony is that for every single one of these trades,
Mr. Madoff told you what to do?" he asked, sounding a skeptical
note.
Upon Madoff's arrest, Bongiorno said, she had to ask another
employee what a Ponzi scheme was. And under questioning from Zach,
she said she couldn't explain the difference between a stock and a
bond and struggled to define the S&P 500.
At one point, Zach showed Bongiorno documents indicating that sales
of Lehman Brothers stock were entered into her account in October
2008, a month after the investment bank collapsed, but backdated to
August.
"Do you remember what happened to Lehman Brothers in September
2008?" Zach asked.
"No, but I guess you're going to tell me," she said.
Zach then showed Bongiorno several front-page newspaper articles
from that month about the financial crisis and questioned her about
the timing of the backdated trades.
"That didn't raise a red flag for you?" he asked.
"If I was told to do it, I did it," she said.
Zach also sought to demonstrate that Bongiorno used proceeds from
the fraud to finance a luxurious lifestyle, showing the jury
photographs of her Bentley sedan and the high-end condominium in
Boca Raton, Florida, where she planned to purchase a $6.5 million
home.
The trial, which began more than four months ago, will resume on
Monday and is expected to end in March.
The case is USA v. O'Hara et al, U.S. District Court, Southern
District of New York, No. 10-cr-0228.
(Reporting by Joseph Ax; Editing by
Eddie Evans and Douglas Royalty)
