New York: $50 billion fraud - Madoff

Discussion in 'North American scam news' started by Gentle Giant, Dec 12, 2008.

  1. Spanish Administrator

    Spanish Administrator THE Spanish Administrator Staff Member

    Ex-Madoff CFO pleads guilty in court in NYC
    Former Madoff CFO DiPascali pleads guilty to conspiracy, other charges in NYC

    * By Tom Hays and Larry Neumeister, Associated Press Writers
    * On Tuesday August 11, 2009, 8:00 pm EDT

    NEW YORK (AP) -- After months of secretly working with the FBI, Bernard Madoff's right-hand man emerged in federal court on Tuesday and pleaded guilty to conspiracy and other charges, contradicting claims by the disgraced financier that he acted alone.

    "I was loyal to him. I ended up being loyal to a terrible, terrible fault," Frank DiPascali told a judge during a hearing at which his long-rumored cooperation deal with the government was confirmed.

    Both prosecutors and defense attorneys portrayed DiPascali as the man who could unlock his former boss' epic Ponzi scheme and potentially make cases against other defendants. Since Madoff revealed the fraud to his sons in early December and was arrested by FBI agents, investigators have looked into the actions of his wife, Ruth, his brother and two sons, who ran a trading operation under the same roof, and other insiders. No other Madoff family members have been charged.

    Attorneys argued the former chief financial officer should be free on bail to help investigators sift through a mountain of evidence. But U.S. District Judge Richard Sullivan surprised both sides by ordering DiPascali jailed immediately -- a rarity for a cooperator in a white-collar case who had pleaded guilty.

    Sullivan said he felt compelled to keep 52-year-old DiPascali locked up after hearing the defendant admit that, at Madoff's direction, he lied to the Securities and Exchange Commission in 2006 when he thought they might discover the fraud. The judge said he was troubled too that DiPascali also lied repeatedly "to people who entrusted him with their life savings."

    Defense attorney Marc Mukasey told Sullivan his client was "completely unprepared for this" and tried several times to persuade the judge to change his mind. He described DiPascali as a genuinely repentant cooperator who won the trust of FBI agents by speaking to them nearly every day since late last year.

    But in the end, a dejected-looking DiPascali was handcuffed and led out of the courtroom.

    The cooperation deal may still earn him leniency against charges which carry a potential penalty of up to 125 years in prison for securities fraud, money laundering and other crimes. It was agreed that sentencing won't occur before May 2010.

    Madoff is serving 150 years in prison for a Ponzi scheme that destroyed thousands of people's life savings, wrecked charities and shook confidence in the financial system. During his guilty plea in March, Madoff insisted that he acted alone. Only one other person -- his accountant -- had been charged during the seven-month investigation before the charges were revealed against DiPascali.

    The conspiracy charge against DiPascali and his cooperation deal are likely to increase speculation that investigators might learn who else was involved in the multi-decade fraud that led thousands of investors to sink at least $13 billion into Madoff's firm only to lose all.

    Madoff told investors late last year that their accounts contained nearly $65 billion, when he actually had only several million dollars left of their money.

    During his plea, DiPascali described himself as a "kid from Queens" who began working for Madoff in 1975, just after he finished high school. He said he became aware of the fraud by the 1980s or early 1990s.

    DiPascali said account statements showing the firm was making trades for clients were "all fake" -- something "I knew, Bernie Madoff knew and other people knew." He claimed he thought "for a long time" that Madoff had other assets to cover the claims of any investors who might demand their money back.

    "That's not an excuse. I knew everything I was doing was wrong and criminal," he said.

    The SEC, in a complaint filed Tuesday against DiPascali, said one reason the fraud "was not detected for so long was DiPascali's considerable success in overseeing the creation of large quantities of false books and records that corroborated the fictitious trading."

    The agency said new investments were dumped into a bank account that amounted to a slush fund used to pay out redemptions when investors asked for money.

    The SEC said Madoff and DePascali used the fund to enrich themselves, with DiPascali in 2002 setting up an account for himself named after his fishing yacht, "Dorothy Jo." It said he withdrew over $5 million from the account between 2002 and 2008 to fund personal expenses, including the purchase of a new boat. He also received $2 million in salary and bonuses.

    By the summer of 2008, the value of the account exceeded $5.5 billion. But investor redemptions spiked dramatically following the market collapse in September 2008 -- to more than $6 billion -- in the final three months of the fraud, the SEC said.

    When the account dwindled last fall to a few hundred million dollars, DiPascali and Madoff discussed using the remaining funds to liquidate the accounts of family and friends of the firm, including employees, rather than honor redemption requests from institutional investors, the SEC said.

    It said DiPascali reviewed investor lists and identified which accounts should be liquidated and then, with Madoff's approval, instructed that checks be prepared. Those checks, totaling more than $150 million, were found by investigators when Madoff was arrested.

    Mariam Siegman -- calling herself a 65-year-old, near-homeless Madoff victim -- was the only victim to take up the judge's invitation to speak at the hearing.

    She said she opposed acceptance of the plea because it prevents a trial and "the kind of justice that allows truth to be spoken out loud in a courtroom."

    The judge said that he did not believe "the quest for truth ends today."
  2. Central Scrutinizer

    Central Scrutinizer Administrator Staff Member

    And I pay for all those SEC auditors....

    In Transcripts, Madoff Called S.E.C. Exams ‘a Nightmare’

    Published: October 30, 2009

    Hundreds of exhibits supporting a scathing report on the Securities and Exchange Commission’s past investigations of Bernard L. Madoff were released on Friday by the author of the report, the agency’s inspector general, H. David Kotz.

    The 6,157 pages of exhibits include a full account of a June 17 interview with Mr. Madoff, who confessed in March to running the largest Ponzi scheme in history, a fraud whose victims number in the thousands and whose cash losses are now put at more than $21 billion.

    In short excerpts from that interview, included in the full 477-page report made public last month, Mr. Madoff expressed amazement that regulators failed so many times to detect his fraud, given the numerous credible tips that came into the agency over a 16-year period.

    The exhibits provide additional details about Mr. Madoff’s comments, including his observation that the agency’s investigators seemed to find it “inconceivable†that he was operating a massive fraud.

    Indeed, he said he got the impression through all the examinations and investigations over the years that "it never entered the S.E.C.’s mind that it was a Ponzi scheme," according to a 12-page summary of the interview.

    Mr. Madoff said that if the S.E.C. had asked for trading records or talked to the supposed counter-parties in his fake transactions, they would have found the fraud. “If you’re looking for a Ponzi scheme, it’s the first thing you do,†he said.

    Because of the risk of being caught, Mr. Madoff said, he was "worried every time" examiners from the agency showed up. "It was a nightmare for me," he said. adding "I wish they caught me six years ago, eight years ago."

    Mr. Madoff denied that he had ever dealt with Eric Swanson, an S.E.C. lawyer who married his niece, Shana, in 2007. He said that he hadn’t even known they were dating until six months before the wedding.

    In 2004, Mr. Swanson was involved in an investigation of Mr. Madoff’s firm. Mark Donohue, an S.E.C. branch chief who also took part in that investigation, acknowleged to the inspector general that the S.E.C. examiners didn’t pay enough attention to evidence that Mr. Madoff’s firm couldn’t be trading the volume of stock options it claimed to be trading.

    Among the exhibits are transcripts or reports on more than 160 other interviews conducted during the extensive internal investigation, including conversations with four former S.E.C. chairmen, a number of former top officials at the agency and dozens of current and former staff members involved in the various botched investigations examined in the original report.

    E-mail messages, letters, memoranda, telephone records and other bits of evidence are also included in the Madoff trove, which were posted on the agency’s Web site.

    However, many documents and interviews are heavily redacted. For example, in the interview with Mr. Madoff’s secretary, Elaine Solomon, everything is blacked out except for an answer Ms. Solomon gave to Mr. Kotz: “The S.E.C. — they would just be in awe, you know.â€

    Mr. Kotz concluded in his full report that, since 1992, inexperienced and sometimes incompetent staff members had failed to adequately investigate numerous warnings and tips about the enormous Ponzi scheme.

    While the exhibits add no new charges to Mr. Kotz’s unofficial indictment of the nation’s top market regulators — the worst documented failure in the 75-year history of the S.E.C. — they do provide a vivid sense of the tensions, confusions and petty squabbles that derailed each failed inquiry.

    Arthur Levitt Jr., who chaired the S.E.C. from 1993 to 2001, said told investigators he had only met Mr. Madoff at various industry functions and had not been not aware that any complaint had been filed about Mr. Madoff. Mr. Levitt said his reaction after Mr. Madoff confessed in December 2008 was "astonishment."

    Alex Sadowski, former branch chief of the S.E.C.’s inspections division, said he knew Mr. Swanson and had been aware of his relationship with Shana Madoff, which he said began in March 2006.

    Mr. Sadowski also told the inspector general he believed there was some incompetence at the agency’s inspections division, but it was very hard to get rid of people once they were hired. He said there was a "culture of fear" at the S.E.C., where some examiners were afraid to go back and look at other investigators’ work, if they had reasons to believe an examination wasn’t conducted correctly.Other employees described a culture at the agency that allowed investigations to languish for months, even years on end, and that was openly dismissive of anonymous tips like some of the Madoff warnings.

    Indeed, one former senior agency lawyer acknowledged to Mr. Kotz that he thought investigations of Ponzi schemes were not an appropriate use of S.E.C. resources and should be left to law enforcement agencies. Several staff members said those views had shaped their own decisions in the Madoff inquiries.

    The paperwork gathered from past investigations also tells a tale of unseasoned people uncertain about what to do and unwilling to ask for help. In numerous instances cited in the exhibits, employees shared their doubts about some of Mr. Madoff’s assertions in notes or e-mails, but then never took steps to resolve their suspicions or press for more information.

    The report detailed six substantive complaints against Mr. Madoff received by the agency since 1992. While Mr. Kotz found no evidence of any bribery, collusion or deliberate sabotage of those investigations, his investigation exposed dozens of major lapses by staff members — including their remarkable failure to verify Mr. Madoff’s supposed trading with any third parties.

    An examination of customer records after Mr. Madoff’s arrest in December showed that he had made no trades for those customers for decades. Moreover, credible tips to the agency over the years, more fully detailed in the exhibits, repeatedly warned that market records strongly suggested no trading was going on.

    But in each examination, agency staff members relied heavily on Mr. Madoff’s own testimony and records, which turned out to be lies and fabrications.

    The exhibits released on Friday shows how the people involved in those investigations explained what happened in interviews conducted after Mr. Madoff’s arrest on Dec. 11. Those interviews were matched against the notes and records assembled at the time.

    The report also documented that Mr. Madoff frequently cited the S.E.C.’s various investigations to reassure investors that he had passed muster with government regulators. The exhibits include numerous reports from investors that they had been lured into the Ponzi scheme by exactly those assurances.

    The exhibits released on Friday ranged from conversations with unnamed former girlfriends of Mr. Swanson to an interview with a former secretary at the Madoff firm, who described young agency investigators as being awestruck by Mr. Madoff and asserted that some had even left resumes at the office hoping for help in getting Wall Street jobs.
  3. Templar

    Templar Super Moderator

    Madoff: SEC never thought it was a Ponzi scheme

    Madoff: SEC never thought it was a Ponzi scheme
    Friday October 30, 11:17 pm ET
    By Marcy Gordon, AP Business Writer
    Madoff was convinced SEC staff never thought he was running a Ponzi scheme, document shows

    WASHINGTON (AP) -- Bernard Madoff was apparently convinced that it never even occurred to Securities and Exchange Commission staff he was running a Ponzi scheme, despite the agency's numerous probes of his business.
    A document released Friday details a prison interview conducted on June 17 by the SEC inspector general in which Madoff says he had the impression that "it never entered the SEC's mind that it was a Ponzi scheme."

    There were some shades of boasting even as Madoff sat in jail a few months after pleading guilty to fraud. The only problem with officials at the SEC's Washington headquarters, Madoff said, is that he had "too much credibility with them and they dismissed" the idea of a Ponzi scheme.

    The disgraced financier confided that he didn't bring an attorney with him when he testified in an inquiry by the SEC's enforcement division because he believed he didn't need one -- and he was trying to fool the government investigators into thinking he had nothing to hide.

    The details emerged in a summary of Inspector General David Kotz's interview with Madoff at the Metropolitan Correctional Center in New York, released along with hundreds of other documents related to Kotz's extensive investigation of the SEC's stunning failure to detect Madoff's fraudulent scheme for 16 years.

    As the SEC inspectors carried out probe after probe of his business, Madoff said in the interview he was "worried every time" that he'd be caught. "It was a nightmare for me," he said. "I wish they caught me six years ago, eight years ago."

    Madoff, 71, a former Nasdaq stock market chairman, pleaded guilty in March to charges that his secretive investment-adviser operation was a multibillion-dollar Ponzi scheme that destroyed thousands of people's life savings and wrecked charities. It was possibly the largest-ever Ponzi: the classic scheme in which investors are paid with other investors' money rather than actual profits on their investment.

    He is serving a 150-year sentence in federal prison in North Carolina.

    Kotz also issued a statement Friday saying his probe found no evidence to support Madoff's claim of having a "close relationship" with SEC Chairman Mary Schapiro, who previously headed the Financial Industry Regulatory Authority, the brokerage industry's self-policing organization.

    In the interview, Madoff called Schapiro a "dear friend," saying she "probably thinks, I wish I never knew this guy."

    Like the SEC, FINRA made periodic exams of Madoff's brokerage operation, which functioned separately from his investment business hidden from regulators' view.

    An internal review by FINRA found a regulatory breakdown on the part of the organization in the Madoff case.

    The new details from Kotz's inquiry came the same day as word that Madoff's longtime auditor is expected to plead guilty next week in a cooperation deal. Prosecutors told a federal judge in New York that accountant David Friehling was expected to offer a guilty plea at a conference Tuesday to revised charges that accuse him of securities fraud, investment adviser fraud, making false filings to the SEC, and obstructing or impeding administration of the Internal Revenue laws.

    The charges carry a prison term of up to 108 years, though significant cooperation with prosecutors can bring leniency.

    In his interview with Kotz, Madoff said the SEC never asked him about his tiny accounting firm. It seemed incongruous that, with more than $65 billion in private investments he claimed he oversaw for thousands of people, Madoff used what seemed to be a small-time auditor with a minuscule office in suburban New City, N.Y. Authorities say that Friehling appeared to have rubber-stamped Madoff's records.

    Kotz's report of his investigation, made public in early September, painstakingly detailed how the agency's investigations of Madoff were bungled, with disputes among inspection staffers over the findings, lack of communication among SEC offices in various cities and repeated failures to act on credible complaints from outsiders forming a sea of red flags.

    An inspection of Madoff's operation in 2003-04, for example, "was put on the back burner" even though the exam team still had unresolved questions, Kotz found.

    Madoff said in the interview that the SEC examiners "never asked" for basic records to corroborate his operations.

    Madoff's former finance chief, Frank DiPascali, is cooperating with prosecutors after pleading guilty in August to helping Madoff carry out his fraud. Madoff was asked in the interview whether he was concerned about DiPascali's testimony. His answer: "No, he didn't know anything was wrong, either."
  4. Templar

    Templar Super Moderator

    Two Madoff programmers arrested for role in fraud

    Friday, November 13 05:03 pm
    Grant McCool

    Two Madoff programmers arrested for role in fraud

    Two computer programmers provided technical support to falsify documents and trading records for swindler Bernard Madoff and took hush money to help keep the massive fraud going, U.S. authorities said. Skip related content

    The FBI arrested Jerome O'Hara, 46, and George Perez, 43, at their homes on Friday morning on criminal charges of conspiracy for falsifying books and records at both the broker-dealer and investment arms of Bernard L. Madoff Investment Securities LLC in New York.

    "The computer codes and random algorithms they allegedly designed served to deceive investors and regulators and concealed Madoff's crimes," said federal prosecutor Preet Bharara. "They have been charged for their roles in Madoff's epic fraud, and the investigation remains ongoing."

    Madoff was sentenced to 150 years in prison on June 29. The next day, law enforcement sources said the FBI expected as many as 10 people could be criminally charged for their roles in the decades-long fraud of as much as $65 billion (39 billion pounds).

    Thousands of investors around the world were bilked in Wall Street's biggest investment fraud, a Ponzi scheme in which early investors were paid with the money of new clients.

    O'Hara starting working for Madoff in 1990 and Perez in 1991. They were still working for him when the once-respected financier was arrested on December 11, 2008.

    Lawyers for O'Hara and Perez could not immediately be reached for comment.


    The criminal complaint said that in April 2006, O'Hara and Perez attempted to delete 218 of 225 special computer programs run on an IBM server known in the Madoff firm as "House 17."

    In August or September 2006, they met with Madoff and told him they would no longer lie for him, a statement by the FBI and the prosecutor said.

    The FBI found handwritten notes in O'Hara's desk. "I won't lie any longer. Next time, I say 'ask Frank'" said one note, according to the FBI, a reference to Madoff's long-time deputy, Frank DiPascali.

    Madoff told DiPascali to pay the programmers "whatever they wanted in order to keep them happy," the investigators said, and the programmers received pay increases of about 25 percent and net bonuses of about $60,000.

    Madoff, DiPascali and the firm's outside accountant, David Friehling, have all pleaded guilty to criminal charges.

    O'Hara was arrested at his home in Malverne, New York, and Perez was arrested at home in East Brunswick, New Jersey. Their arrests bring to five the number of people who have been criminally charged in the case.

    The charges against the pair carry maximum prison sentences of 30 years and millions of dollars in fines.

    The two men were also served with civil charges by the U.S. Securities and Exchange Commission. O'Hara and Perez were accused of knowing that the computer programs they developed in 2003 and 2004 contained fraudulent information used in U.S. and European regulatory reviews.

    The SEC and a European accounting firm reviewed Madoff's operations at least five times between 2004 and 2008, the government said. The SEC has been criticized by legislators and investors for not catching Madoff. The news of the fraud shook investor confidence in regulators and the market.

    (Reporting by Grant McCool, Rachelle Younglai; editing by John Wallace)
  5. Nanook

    Nanook Administrator Staff Member

    Madoff a hero in prison...I bet it isn't for the reasons below:

    By Michelle Ruiz.

    (June 6) -- Bernard Madoff may wear the same standard-issue khakis as the other inmates at North Carolina's Butner Federal Correctional Complex, but to them, he isn't just prisoner No. 61727-054. The $65 billion Ponzi schemer is considered a hero and a celebrity among fellow convicts, solicited for autographs and business advice, New York magazine reports in a feature story on newsstands Monday.

    Citing interviews with more than two dozen current and former Butner inmates, writer Steve Fishman describes a brazen Madoff who boasts about his crimes to a gaggle of admiring prison "groupies."

    "F--- my victims," Madoff, 71, retorted after being ribbed by a fellow inmate, prison artist K.C. White told the magazine. "I carried them for twenty years, and now I'm doing 150 years."

    According to the magazine, when another convict told Madoff that stealing from old ladies was "kind of f- - -ed up," Madoff "coolly replied, 'Well, that's what I did.'"

    Madoff's attorneys did not respond to AOL News' request for comment on the magazine story.

    The inside look at Madoff's life in prison paints him as a titan among the "soft" prisoners, including pedophiles and "rats," in his housing unit at Butner, where there are windows without bars overlooking landscaped yards, one inmate said. According to the feature, Butner inmates trailed Madoff as he walked a gravel track during recreational time and even pressed him for his autograph. He has refused to sign them, the magazine said, because he believes they will end up on eBay and does not want inmates making money off his name. (He made an exception for a prison artist who sketched him.)

    "He enjoyed being a celebrity," Nancy Fineman, an attorney who interviewed Madoff shortly after his arrival at Butner.

    One prisoner, John Bowler, recalled sitting next to Madoff as both watched a "60 Minutes" segment about Madoff's con.

    " 'Bernie, you got 'em for millions,'" Bowler recalled he said to Madoff. "'No, billions,' he told me."

    Fishman writes that Madoff's celebrity transcends the traditional prison cliques, as he hangs out with "lifers" as well as black and gay inmates in his cellblock, nicknamed "Camp Fluffy" for its gym, library, pool tables and sweat lodge.

    "A hero," lifer Robert Rosso wrote on a website he founded called, New York magazine reported. "He's arguably the greatest con of all time."

    The New York report said Madoff is exalted even by Butner's other high-profile prisoners, former mob boss Carmine Persico and former Navy intelligence analyst-turned-spy, Jonathan Pollard. Both men are identified as being part of Madoff's "prison family."

    Madoff reportedly impressed his fellow inmates with tales of his world travels and his expensive watch collection, though he now wears a Timex purchased from the Butner commissary for $41. His A-list status prompts convicts who are are aspiring entrepreneurs to solicit business advice from him.

    "If I'd lived that well for 70 years, I wouldn't care that I ended up in prison," one told the magazine.

    Leaving behind the life of luxury he once led in Manhattan, the magazine says Madoff now subsists on $290 per month, purchasing mac and cheese (60 cents) and cans of Diet Coke (45 cents) from the commissary. Inmates told Fishman he returns from visits with his wife, Ruth, appearing "wistful" and telling them she was "off to play golf."

    Madoff earns 14 cents an hour sweeping the commissary floor but his bid to manage the budget of the prison-landscaping crew was rejected, according to New York magazine.

    "Hell, no," an amused supervisor told another inmate of Madoff's application. "I do my own budget. I know what he did on the outside."
  6. Gentle Giant

    Gentle Giant Giant Admin for a Day Staff Member

    Wow! they may get some of the Bernie money back!

    Madoff Trustee Gets $7 Billion Settlement From Picower Estate

    TOM HAYS and DAVID B. CARUSO | 12/17/10 06:23 PM | AP

    NEW YORK — Many of Bernard Madoff's victims who thought they lost everything could get at least half their money back after the widow of a Florida philanthropist agreed Friday to return a staggering $7.2 billion that her husband reaped from the giant Ponzi scheme.

    Federal prosecutors reached the settlement with the estate of Jeffry Picower, a businessman who drowned after suffering a heart attack in the swimming pool of his Palm Beach, Fla., mansion in October 2009. Picower was the single biggest beneficiary of Madoff's fraud.

    U.S. Attorney Preet Bharara called the forfeiture the largest in Justice Department history and a "game changer" for those swindled by Madoff. He commended Picower's widow, Barbara, "for agreeing to turn over this truly staggering sum, which really was always other people's money."

    "We will return every penny received from almost 35 years of investing with Bernard Madoff," Barbara Picower said in a statement. "I believe the Madoff Ponzi scheme was deplorable, and I am deeply saddened by the tragic impact it continues to have on the lives of its victims. It is my hope that this settlement will ease that suffering."

    The settlement means roughly half of the $20 billion that investors entrusted to Madoff has now been recovered, authorities said.

    The $7.2 billion eclipses by far the deals reached with other defendants sued by Irving Picard, the court-appointed trustee who is recovering victims' money. The next largest – $625 million – was announced earlier this month in a settlement with Massachusetts businessman and philanthropist Carl Shapiro.

    Madoff's burned clients greeted the news warily.

    Willard Foxton, a British journalist whose father committed suicide after losing his life savings, said he was stunned that a major investor decided to return so much money.

    "I don't think he would have killed himself if he thought a few years down the line that he was going to be getting a good amount of his money back," he said. He added: "I thought we had zero chance of getting any money back, and I still am very, very skeptical. If I see a penny before 2015 I'd be amazed."

    Lawrence Velvel, a law school dean who lost money he had invested with Madoff for decades, said Picower's widow "did the right thing."

    But he was wary about who, in the end, would benefit more – the multitude of small and mid-sized investors who had been counting on their investments for their retirement, or the big hedge funds that did business with Madoff.

    "It's going to go to the hedge funds," he said.

    Madoff, 72, is serving a 150-year prison sentence.

    Jeffry Picower, who was 67 when he died, was one of Madoff's oldest clients. Over the decades, he withdrew about $7 billion in bogus profits, or more than a third of the sum that disappeared in the scandal. The money paid out to Picower was supposedly made on stock trades, but authorities said it was simply stolen from other investors.

    Picower's lawyers claimed he knew nothing about the scheme, but Picard had argued in court papers that the businessman must have known the returns were "implausibly high" and based on fraud.

    Barbara Picower said she was "absolutely confident that my husband, Jeffry, was in no way complicit in Madoff's fraud and want to underscore the fact that neither the trustee, nor the U.S. attorney, has charged him with any illegal act."

    Asked whether criminal investigators had any suspicions about Picower, Bharara would say only that the question became moot when he died. He gave the same response to questions about Mark Madoff, the son who committed suicide on Dec. 11.

    Lawyers for Picower's estate have been in negotiations with the trustee for some time. In his will, Picower had earmarked most of his fortune for charity.

    A huge charitable foundation that Picower had created closed in 2009 after its assets were wiped out in the Madoff fraud. It had donated hundreds of millions to colleges, libraries and other groups.

    Thousands of people, banks and hedge funds that invested with Madoff saw their savings wiped out when the fraud was revealed two years ago. Many, though, like Picower, had been drawing bogus profits from their Madoff accounts for years and walked away from the scheme having taken out more money than they put in.

    Madoff's clients had thought, based on his fraudulent account statements, that they had more than $60 billion invested in stocks with Madoff. Investigators found, though, that no investments were made, and that an estimated $20 billion in principal was simply being paid out bit by bit to other investors.
  7. JoeNinety

    JoeNinety New Member

  8. Lioness1

    Lioness1 Banned

    5 Madoff ex-workers convicted in case`s 1st trial

    Yahoo News
    5 Madoff ex-workers convicted in case's 1st trial
    Associated Press
    By LARRY NEUMEISTER 12 hours ago

    FILE – In this Oct. 8, 2013 file photo Annette Bongiorno arrives to federal court in New York. She is one of five former employees of imprisoned financier Bernard Madoff convicted Monday, March 24, 2014 in New York, at the end of a six-month trial that portrayed them as telling an elaborate web of lies to hide a fraud that enriched them and cheated investors out of billions of dollars. (AP Photo/Seth Wenig, File)
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    FILE – In this Oct. 8, 2013 file photo Annette Bongiorno arrives to federal court in New York. She is …

    NEW YORK (AP) — Five former employees of imprisoned financier Bernard Madoff were convicted Monday at the end of a six-month trial that cast them as the long arms of their boss, telling an elaborate web of lies to hide a fraud that enriched them and cheated investors out of billions of dollars.

    The trial, one of the longest in the storied history of Manhattan federal court, was the first to result from the massive fraud revealed in December 2008 when Madoff ran out of money and was arrested. And it was a renunciation of Madoff's claim when he pleaded guilty to fraud charges in March 2009 before trial that he acted alone.

    "The evidence was just overwhelming," juror Craig Parise told reporters as he left the courthouse.

    Another juror, Sheila Amata, said she hoped "this brings some level of closure" to the victims. She added that the "facts spoke for themselves" in the case and that Madoff, who is serving a 150-year prison sentence, "seemed to have a split personality." Evidence showed him showering employees, friends and some select customers with favors and riches while he plundered the investment accounts of others.

    The case focused on five people who prosecutors said helped Madoff carry out the fraud.

    Each was convicted of conspiracy to defraud clients, securities fraud and falsifying the books and records of a broker dealer. Prosecutors obtained convictions on all 31 charges, though only one defendant was charged in some counts.

    Prosecutors unveiled hundreds of exhibits and showcased dozens of witnesses to try to prove charges against Annette Bongiorno, 66, Madoff's longtime secretary; Daniel Bonventre, 67, his director of operations for investments; JoAnn Crupi, 53, an account manager; and Jerome O'Hara, 51, and George Perez, 48,computer programmers.
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    FILE - In this Oct. 8, 2013 file photo, JoAnn Crupi …
    FILE - In this Oct. 8, 2013 file photo, JoAnn Crupi arrives to federal court in New York, Tuesday. T …

    The maximum potential sentences range from 78 years to 220 years in prison when the charges for each defendant are stacked up, but the actual sentences are likely to be far below that once the judge takes into consideration prior records and other facts unique to each defendant.

    The defendants largely took the verdicts in stride except for Crupi, who looked shocked when the first guilty verdict was read and later shook her head.

    After sentencings were set for the last week of July and U.S. District Judge Laura Taylor Swain rejected requests that the defendants be immediately detained, the defendants emerged from court to hug family members. They declined to comment as they passed reporters.

    Bonventre attorney Andrew Frisch said as he left court they were disappointed by the verdicts and will appeal.

    "The list of Bernard Madoff's victims now include these five former employees," Frisch said.

    Attorney Eric Breslin, representing Crupi, said: "The name Madoff was a tall mountain to climb. I think it's just a fact."
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    FILE - In this June 21, 2011 file photo, Jerome O'Hara, …
    FILE - In this June 21, 2011 file photo, Jerome O'Hara, former computer programmer for Bernard L …

    U.S. Attorney Preet Bharara said the convictions, along with prior guilty pleas of Madoff and eight other defendants, demonstrate what prosecutors have believed since the early stages of the investigation: "This largest-ever Ponzi scheme could not have been the work of one person."

    "These defendants each played an important role in carrying out the charade, propping it up and concealing it from regulators, auditors, taxing authorities, lenders and investors," Bharara said.

    One case remains outstanding, that of a former senior tax partner at the accounting firm Konigsberg Wolf & Co. who was charged with aiding Madoff by directing others to falsify records to conceal his fraud.

    Bongiorno and Bonventre testified for several days in their own defenses. They insisted they were victims of Madoff's fraud, losing millions of dollars they had invested with him because they believed in and trusted him.

    Bongiorno told the jury she once asked how the firm was "making money when everyone else was losing money." She said Madoff told her they could make money in a down market by shorting stocks and she believed him.

    Parise, the juror, said the testimony by Bongiorno and Bonventre "did not help their cause."
    View gallery
    FILE - In this Oct. 8, 2013 file photo, George Perez …
    FILE - In this Oct. 8, 2013 file photo, George Perez arrives to federal court in New York. Perez, a …

    Clients lost nearly $20 billion. A court-appointed trustee has recovered much of the money by forcing those customers who received big payouts from Madoff to return them. When the fraud was revealed, Madoff admitted that the nearly $68 billion he claimed existed in accounts was only a few hundred million dollars.

    The centerpiece of the prosecution's case was Frank DiPascali, Madoff's former finance chief, and five other insiders who pleaded guilty and agreed to cooperate.

    At times, however, their testimony seemed to support the defendants' claims they were kept in the dark.

    DiPascali acknowledged he lied to Perez and O'Hara "to trick them into working on the projects that he needed them to work on."

    Attorney Larry Krantz, representing Perez, asked him if he was manipulating them so they could participate in the massive fraud without knowing it.

    "Yes," DiPascali answered.
    View gallery
    FILE - In this June 21, 2011 file photo, Daniel Bonventre, …
    FILE - In this June 21, 2011 file photo, Daniel Bonventre, former director of operations at Bernard …

    Defense lawyers, in their closing arguments, hammered at the notion that their clients were victims, too, losing tens of millions of dollars they had entrusted to their boss.

    Attorney Gordon Mehler said his client, O'Hara, was "used, abused, manipulated, lied to, snookered and bamboozled" by two of the greatest criminal masterminds in history, Madoff and DiPascali.

    Bongiorno's attorney, Roland Ripoelle, said Bongiorno "saw $50 million of what she thought was her own money but was really Bernie Madoff's monopoly money go up in smoke. ... Ms. Bongiorno relied on Mr. Madoff, and she was fooled by him."

    Breslin said Crupi was a victim of "the lies that they told her to her face, year after year."

    The verdict was delivered after the jury deliberated for about 20 hours over a period of two weeks. The panel was down to 11 jurors after one juror became sick during deliberations and was dismissed.

    The defendants were described by prosecutors as "necessary players" in Madoff's fraud. They said Bongiorno, hired in 1968, and Crupi, hired in 1983, used old stock tables to fabricate account statements and other fake records that kept the Securities and Exchange Commission in the dark. The government said they also rewarded themselves with tens of millions of dollars in salaries and bonuses, including $2.5 million for a beach house for Crupi as the Ponzi scheme was falling apart.

    Prosecutors said O'Hara and Perez developed a software program that automated the fraud, generating "information out of thin air," as one put it.

    The Ponzi scheme nearly ran out of money at least twice since the early 1990s before finally collapsing during the 2008 financial crisis.

    During jury selection, prospective jurors were told that they might hear references to big names including Steven Spielberg, Sandy Koufax, Kevin Bacon and Zsa Zsa Gabor, among Madoff's victims. Hundreds of exhibits and thousands of pages of materials were put before jurors.

    Also mentioned were Madoff's relatives, including his brother, wife and two sons. One of the sons committed suicide two years after the fraud was revealed.

    Madoff, 75, is serving his sentence at a federal lockup in North Carolina.

    Over the years, Alger Hiss and Julius and Ethel Rosenberg were tried as traitors in the Manhattan courthouse, and Khalid Sheik Mohammed's nephew Ramzi Yousef was convicted there in the 1993 World Trade Center bombing and in a plot to blow up a dozen airliners.
  9. Sphinx

    Sphinx Administrator Staff Member

    More fallout from Bernie.

    John Paulson plunged to his death at a posh New York hotel, according to reports.

    John Paulson at Paulson & Co., was pronounced dead shortly after 5 p.m. Monday at the Sofitel building in what authorities are calling an apparent suicide. The New York Post reported that Murphy, 56, jumped from a room on the 24th floor and landed on a fourth-floor terrace....

    ....There was no apparent motive for the suicide, though Murphy's financial travails have been well-documented.

    Madoff himself is serving a 150-year prison sentence; his son Mark hanged himself in 2010. Murphy is believed to be the fourth person connected to the Madoff case to commit suicide....

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