Bernard Madoff $50 Billion Ponzi Scheme

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Five Former Employees of Bernie Madoff Found Guilty Of Fraud
Verdict Comes After Four Days of Deliberations and Trial of More Than Six Months

By Christopher M. Matthews
Updated March 24, 2014 3:31 p.m. ET
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Jurors found five former employees of Bernard L. Madoff guilty of fraud, a verdict that shows the convicted Ponzi schemer got a wide range of help keeping afloat a scam that ran for decades and cost investors $17 billion.

The defendants, who included two trading managers, two computer programmers and the firm's director of operations, were found guilty of conspiracy to defraud investors and securities fraud. The outcome means that jurors were convinced all five in some way helped Mr. Madoff perpetrate the fraud. They each face decades in prison.

The result, which comes after four days of deliberation, caps a trial that lasted more than six months and hands prosecutors a win in their only attempt to bring a Madoff case before a jury.

Testimony during the trial showed the extent of the efforts Mr. Madoff and his employees went to disguise their fraud, from creating computer programs that generated fake documents to lying to regulators and auditors.

Computer programmers Jerome O'Hara and George Perez were convicted of creating phony customer accounts, while portfolio managers Annette Bongiorno and JoAnn Crupi were convicted of concocting trading records. Daniel Bonventre, a former operations director for Mr. Madoff, helped gin up phone books and records, the jury found.

Mr. Madoff himself was sentenced nearly four years ago to 150 years in prison. He has insisted he carried out the long-running scheme on his own. Prosecutors turned to an array of witnesses, including several of Mr. Madoff's former employees, to establish that wasn't the case.

The government's star witness was Frank DiPascali Jr., the former chief financial officer who worked with Mr. Madoff for 33 years. Mr. DiPascali was on the stand for more than a month and in sometimes emotional testimony implicated all of the defendants, telling jurors he worked with all five to produce fraudulent records.

In one instance, he recalled asking Mr. O'Hara to produce records after an outside auditor from KPMG showed up at the firm. Mr. DiPascali said that when he went to get the document hours later, he witnessed Messrs. O'Hara and Perez and Ms. Crupi putting it in the refrigerator to cool it down after it came off the printer and throwing the document around like a "medicine ball" to make it look used.

Mr. DiPascali, 57 years old, pleaded guilty in 2009 and faces a maximum 125 years in prison. He is confined to his home as part of a cooperation agreement with the government that could result in a recommendation for a more lenient sentence.

The defense attorneys tried to discredit Mr. DiPascali as a professional con man who would say anything to reduce his sentence. During a combative and lengthy cross-examination, they asked him about the five boats he was given by Mr. Madoff and whether he would have made more money if he was paid for every lie he told.

Other testimony focused on the alleged spending habits of the defendants, who prosecutors say became millionaires in their time working at the firm.

Ms. Bongiorno, for example, bought a Bentley and two Mercedes-Benz automobiles as well as a $6.5 million condominium in Florida, which she said she purchased in order to "downsize."

With the verdict, more than a dozen people, including Mr. Madoff, have either pleaded guilty or been convicted of crimes connected to the Ponzi scheme.

The defense attorneys didn't dispute that their clients fabricated documents that misled clients and regulators. But they sought to portray them as innocent victims of the scheme's masterminds.

One of the defense attorneys, Gordon Mehler, described Mr. Madoff and Mr. DiPascali as "two of the greatest criminal masterminds in human history."

The defendants trusted Mr. Madoff—"a titan, a guru, a Wall Street genius," according to Ms. Bongiorno's attorney, Roland Riopelle— and merely did what they were told.

Ms. Bongiorno testified in her own defense, a somewhat rare occurrence in white-collar trials, and said she never thought it was suspicious to backdate trades because her only instruction in the financial- services industry had come from Mr. Madoff. Mr. Bonventre also testified in his own defense and said that because he wasn't involved in the trading, he never realized the firm was a fraud.

Prosecutors called the defense theories "preposterous," and urged jurors to reject their "fantasy" defenses.

Assistant U.S. Attorney Randall Jackson said the defendants' explanations were akin to portraying themselves as helpers in the workshop of Santa Claus, who never realized everything was make-believe. But even children figure out that Santa doesn't exist, Mr. Jackson said.

"Madoff Securities was not Santa's factory," he said. "The defendants in this case were not children. During the decades they worked at Madoff Securities, they were adults."

Write to Christopher M. Matthews at [e-mail]

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