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 A federal jury in New York found back-office director Daniel
Bonventre, portfolio managers Annette Bongiorno and Joann Crupi,
and computer programmers Jerome O'Hara and George Perez guilty on
all counts, including securities fraud and conspiracy to defraud
clients.
The five-month trial was one of the longest white-collar criminal
trials in Manhattan federal court history, featuring dozens of
witnesses and thousands of documents. It is the first criminal trial
stemming from Madoff's fraud.
The five defendants will be sentenced in late July.
"The scheme these defendants helped perpetrate cost innumerable
investors their life savings," U.S. Attorney Preet Bharara said in a
statement. "Now it likely will cost the defendants their freedom."
Madoff, 75, is serving a 150-year-prison sentence after pleading
guilty in March 2009 to running the Ponzi scheme, estimated to have
cost investors more than $17 billion of principal. He was arrested
in December 2008.
Nine other people have pleaded guilty in connection with Madoff's
fraud, some of whom testified at the trial as cooperating government
witnesses.
As the jury foreman said "guilty" 59 times in a row, there was no
visible reaction from the defendants, who each faced anywhere from
eight to 20 charges.
"The list of Bernard Madoff's victims now includes these five former
employees," Andrew Frisch, a lawyer for Bonventre, said after the
verdict, adding that he plans to appeal.
There was little dispute that various defendants engaged in
activities such as backdating fake trades and creating false
documents. Instead, the case turned on whether they knew at the time
that they were aiding Madoff's fraud.
The defendants claimed Madoff duped them into becoming unwitting
accomplices, using a potent combination of charm and deception.
"Why wouldn't she believe him?" Roland Riopelle, the lawyer for
Bongiorno, said during his closing argument. "He was the head of the
firm and the chairman of NASDAQ. She was by design, by Mr. Madoff's
design, living in her own little bubble."
But prosecutors pointed to internal documents seized from Madoff's
investment firm, including handwritten notes from the defendants, as
clear evidence they knew what was happening.
"The notion that these defendants didn't know the trading was fake
is an absurdity," Assistant U.S. Attorney Randall Jackson said at
the end of the trial.
The key government witness was Madoff's right-hand man, Frank
DiPascali, who testified as part of a plea deal and implicated each
of the five defendants in the fraud.
Defense lawyers urged the jury to disregard his claims, calling him
an inveterate liar desperate to avoid a lifelong prison term. But
several jurors interviewed after the verdict said they found
DiPascali's testimony credible.
"It was pretty captivating," said Sheila Amato, an art teacher.
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By contrast, jurors scoffed at the testimony of Bongiorno and
Bonventre, who surprised trial observers by taking the stand in
their own defense to deny knowing about any fraud. Nancy Goldberg,
an instructional assistant for at-risk public school students, said
the testimony was "embarrassing."
Riopelle said he did not regret putting Bongiorno on the stand, as
it was the only way to show the jurors she "never understood the
consequences of her actions."
The government said Bonventre helped conceal the fraud by
manipulating the firm's general ledger. He also deceived regulators,
auditors and bankers, filed false tax returns and helped Madoff
evade taxes as well, prosecutors said.
Prosecutors accused Crupi and Bongiorno of backdating fake trades in
customer accounts months, and sometimes years, after they
purportedly occurred.
And O'Hara and Perez were accused of writing computer programs that
generated fake trade records to fool auditors, prosecutors said.
The trial provided an intimate look at Madoff's fraud and the
intricate structure of lies that kept it afloat, with Madoff fooling
even his most trusted aides into believing he had assets stashed
somewhere.
No one at the firm knew the entire truth; even DiPascali, who was
deeply involved in the fraud, said he didn't realize it was a Ponzi
scheme until Madoff confessed to him just days before his arrest
that he had run out of money.
Asked whether the defense could have anything differently, Eric
Breslin, a lawyer for Crupi, said, "Madoff was a tall mountain to
climb."
The case is U.S. v. O'Hara et al, U.S. District Court, Southern
District of New York, No. 10-cr-00228.
(Reporting by Joseph Ax; additional reporting by Nate Raymond and
Jonathan Stempel; editing by Dan Grebler, David Gregorio and Bernard
Orr)
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