Bernard Madoff’s former secretary told a jury she heard the con man shout at his brother Peter Madoff in an argument about a top aide now accused of assisting his fraud, saying the man “knows how everything works.”
The conversation about Daniel Bonventre, one of five former employees on trial for allegedly aiding Madoff’s $17 billion Ponzi scheme, ended with Madoff telling his brother to mind his own business, using an expletive, Eleanor Squillari testified today in federal court in Manhattan. Squillari was Madoff’s receptionist and personal assistant from 1984 until his 2008 arrest.
The five former employees are accused of helping Madoff hide his fraud from customers and regulators for years, and getting rich in the process. It’s the first criminal trial stemming from the scheme in Madoff’s investment-advisory business, which prosecutors say started in the early 1970s and imploded at the peak of the financial crisis.
Bonventre, who oversaw the broker-dealer and proprietary trading operations of Madoff’s company, where real trading took place, has denied involvement in the fraud and says he was duped like thousands of others.
Bonventre’s lawyer, Andrew Frisch, asked Squillari during cross examination if she knew exactly what Bernard Madoff and his brother were discussing when they argued about Bonventre. She said no. She agreed the fight could have been about trading operations or something else related to the job.
The other defendants in the case, all accused of helping make fake documents for decades, are Annette Bongiorno, who worked for Madoff for 40 years and ran the investment advisory business; Joann Crupi, who managed large accounts; and computer programmers George Perez and Jerome O’Hara. All five have pleaded not guilty.
In a ruling outside the presence of the jury, U.S. District Judge Laura Taylor Swain this week granted the defense’s request that Squillari be barred from testifying that O’Hara and Perez looked “smug” when they left a private meeting with Madoff around 2006. Defense lawyers said it was unfair speculation, while prosecutors said it was “central” to their case alleging the men extorted Madoff to assist his fraud.
O’Hara and Perez, who joined Madoff’s firm in the 1990s, acknowledged that a “dramatic meeting” with Madoff took place in 2006, according to their lawyers’ Oct. 17 opening statements to the jury. The men claim that they arranged the encounter to challenge Madoff’s request for computer code they believed might be abused, and that they were “extremely nervous” about confronting him and being fired.
Mark Doctoroff, a former executive director at JPMorgan Chase & Co. (JPM) who acted as the relationship manager for Madoff’s securities firm from about February 2008 until it closed, testified today he was unaware at the time that Madoff had a formal investment advisory unit or that Madoff’s JPMorgan bank account was used for that business.
Doctoroff, who left New York-based JPMorgan last year, said Bonventre asked the bank in November 2008, less than a month before Madoff’s arrest, if Madoff’s firm could borrow $200 million secured by U.S. Treasuries, even though Madoff’s credit limit for such loans was $100 million.
“They are doing well financially,” Doctoroff said in a Nov. 17, 2008, internal e-mail to the bank’s credit department about the request, which he said should be granted. The e-mail was displayed on flat-screen monitors for the jury.
“They are looking at the current market as an opportunity to make investments, true to their value investing style,” Doctoroff said in the e-mail. “Told Dan you would call him back if a problem, or let me know and I will -- but think we should process.”
The loan was never processed.
The case is U.S. v. O’Hara, 10-cr-00228, U.S. District Court, Southern District of New York (Manhattan).
To contact the reporter on this story: Erik Larson in New York at firstname.lastname@example.org