US fraud trial to begin for 5 ex-Madoff employees
NEW YORK (AP) — The longtime secretary of imprisoned financier Bernard Madoff and four other back-office subordinates of the Ponzi king are going to trial Tuesday as the government for the first time shows a jury what it has collected in its five-year probe of one of history’s biggest frauds.
The trial in federal court in Manhattan is expected to last up to five months and feature the unveiling of the government’s prize witness — Frank DiPascali, Madoff’s former finance chief.
The government is counting on him to explain to jurors the roles each defendant played in a fraud that prosecutors say stretched back into the early 1970s and consumed nearly $20 billion invested by thousands of victims, including retirees, charities, school trusts and even Holocaust survivors. Much of the money has since been recovered by a court-appointed trustee.
Amid a collapsing economy, Madoff was forced to reveal his fraud in December 2008, acknowledging that accounts he had told investors were worth nearly $68 billion only days earlier actually held only a few hundred million dollars. He pleaded guilty to fraud charges a few months later and was sentenced to a 150-year prison term in Butner, North Carolina.
Madoff, 75, claimed during his guilty plea that he acted alone, but the government says that was not true and will use the trial to try to prove it.
Prosecutors say fictitious trades and phantom accounts were created with help from Madoff’s secretary, Annette Bongiorno, a supervisor in his private investment business; Daniel Bonventre, his director of operations for investments; JoAnn Crupi, an account manager; and computer programmers Jerome O’Hara and George Perez. All have pleaded not guilty. Six others have pleaded guilty in the case, including DiPascali.
Pretrial maneuvers included an effort by prosecutors to exclude from evidence any mention of the sexual and romantic activities that seemed to permeate Madoff’s offices when he was perceived as a high flying Wall Street guru, so smart that he could ensure double-digit returns to his investors even when the economy was flat or in decline.
“Suffice it to say that the government’s investigation has revealed that, over the course of the multi-decade fraud alleged in the indictment, a number of Madoff Securities employees and customers — including expected witnesses, defendants, and others — were engaged in romantic or sexual relationships,” prosecutors said in court papers.
The government said Madoff himself was engaged in a love triangle with one of the defendants.
U.S. District Judge Laura Taylor Swain, a calm, thoughtful presence on the bench, has not yet said for sure whether the salacious allegations can be aired in the courtroom.
Yet, she has excluded much of the evidence of the lavish lifestyles enjoyed by the defendants as Madoff splashed them with tens of millions of dollars even as the Ponzi scheme grew closer to its abrupt culmination.
Jurors won’t hear about Bongiorno’s Mercedes or her vacation home or her shopping forays to pricey department stores.
As her lawyers wrote in persuading the judge to exclude personal expenses: “The government seeks to tap into the public’s generalized anger at ‘Wall Street Greed,’ which has the potential to result in an unjust verdict ‘fabricated’ from the jury’s emotional response to proof that is not tethered to any element of the charges against Ms. Bongiorno.”
Crupi’s lawyers made a similar argument, saying “whether she purchased a beach house or not, went on vacation or not, bought a deluxe refrigerator or not, proves nothing about what happened ... or what Ms. Crupi knew.”
Still, the judge is allowing into evidence information about the beach house and a Caribbean vacation for another defendant because Madoff’s firm directly helped fund them.
And the first trial may not be the last.
Just days ago, prosecutors charged a 77-year-old accounting executive, saying he directed others since at least the early 1990s to falsify records and help conceal Madoff’s fraud. He, too, has pleaded not guilty.