Ex-Madoff Employees Charged With Conspiracy
NEW YORK (CBS 2 / 1010 WINS / WCBS 880/AP) – Two longtime back office employees of Bernard Madoff were arrested Thursday on charges that they helped the disgraced financier dupe investors for decades by making fictitious investments — and that they cashed in on the epic Ponzi scheme themselves.
Annette Bongiorno is married to a retired New York City electrician. She owns a home in Boca Raton Florida, another in Manhasset, New York, two Mercedes Benzes, and a Bentley.
WCBS 880′s Irene Cornell reports
However, following her arrest in Boca Raton Thursday morning, she was the latest defendant accused of helping her boss to carry out the largest financial fraud in U.S. history, someone who federal prosecutors said spoke regularly to defrauded clients, and oversaw the preparation of phony account statements.
Over the course of her 40-year career, prosecutors said Bongiorno stole more than $13 million from hundreds of client investment accounts she was assigned to manage. Trades she was supposed to make on behalf of clients were allegedly only executed on paper.
Prosecutors, citing internal communications, say Bongiorno used a computer program designed to backdate trades and manipulate account statements.
“I need the ability to give any settlement date I want,” she wrote to a manager in the early 1990s, according to the indictment.
Investigators said it was all done in the name of perpetuating the scheme for Madoff, who was serving a 150-year prison sentence.
Bongiorno and another long time Madoff employee, Joann Crupi, who was also arrested Thursday at her home in Westfield, New Jersey, were both charged with conspiracy, securities fraud and falsifying books and records of a broker dealer.
Crupi was charged with creating false records to cover Madoff’s tracks amid reviews by the Securities and Exchange Commission. Prosecutors say that as the scheme unraveled, she “became aware that client redemption requests bore no relationship to (the business’) cash on hand, which by late 2008 was woefully insufficient to meet those requests,” the indictment said.
Seized records show that Bongiorno deposited about $920,000 in her own Madoff account from 1975 to 2008 and withdrew more than $14 million over the same period, the indictment said. Crupi received hundreds of thousands of dollars in “off the books” income, it added.
The women “protected and perpetuated the Madoff mirage while putting very real money in their own pockets,” U.S. Attorney Preet Bharara said in a statement.
Crupi faced a judge in Manhattan court Thursday. She was ordered held on $5 million bond.
“She’s not guilty and we’ll defend vigorously,” Crupi’s attorney, Eric Breslin, told CBS 2′s John Slattery.
Bongiorno appeared in court in West Palm Beach, Fla. A bail hearing was scheduled for Monday, meaning Bongiorno will spend at least the weekend in jail.
She was asked by U.S. Magistrate Judge Ann Vitunac if she understood the charges.
“I understand most of it,” she replied. “I don’t understand all of it.”
Authorities filed civil papers in June seeking to recoup $5 million from the two employees. The government said in August that it had traced houses in Manhasset, N.Y., and Boca Raton, Fla., and other assets to Bongiorno.
Bongiorno’s attorney, Nina Mandel, asked if property that had government liens on it could be used toward the bond requirement. Vitunac said it could not, leading Mandel to note that Madoff had been allowed to use such property to post bond.
“I don’t have him before me,” Vitunac replied.
Mandel rubbed Bongiorno’s back during the short proceeding. The defendant wore khakis, a black shirt and flip-flops, and was shackled at the wrists and ankles.
“Now that Annette has been formally charged, we look forward to demonstrating that she is not guilty of these allegations,” Bongiorno’s attorney, Maurice Sercarz, said.
Madoff is serving a 150-year sentence in federal prison after admitting that he operated his fraud for at least two decades, cheating thousands of individuals, charities, celebrities and institutional investors. Losses are estimated at around $20 billion, making it the biggest investment fraud in U.S. history.
Both Crupi and Bongiorno face up to 20 years in prison if convicted of the most serious charges.
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