Madoff’s Ex-Controller Tells Jury of Romance With Finance Chief

Bernard Madoff’s former controller, part of his inner circle for three decades, told a jury she’s testifying against five ex-colleagues in a bid for leniency when she’s sentenced for aiding the con man’s $17 billion fraud.

Enrica Cotellessa-Pitz, who faces as long as 50 years in prison, began her testimony in federal court in Manhattan today by describing her first interview at the securities company, where she sought a receptionist position after graduating from high school in 1976. Though she wasn’t hired, she met Madoff’s finance chief, Frank DiPascali, during the interview and started a three-year relationship with him, she said.

“I did not get the job, but I got a boyfriend,” Cotellessa-Pitz said today, prompting the courtroom, not far from Wall Street, to erupt in laughter. The two were still dating when Cotellessa-Pitz obtained a clerical position with Madoff two years later in 1978, she said.

Her five ex-colleagues 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, which prosecutors say started in the early 1970s and imploded at the peak of the financial crisis.

Cotellessa-Pitz pleaded guilty in 2011 to four counts, including broker-dealer fraud and filing false reports with regulators. At her plea hearing two years ago, Cotellessa-Pitz said she wasn’t aware of the Ponzi scheme while falsifying the firm’s accounting for almost a decade.

Brooklyn Born

The former controller, who was born in Brooklyn, New York, and raised in the Ozone Park neighborhood of Queens, New York, testified for 20 minutes today and is scheduled to take the stand again tomorrow.

DiPascali pleaded guilty in August 2009 to 10 counts, including conspiracy, fraud and money laundering. He’s expected to testify at the trial and is also cooperating with prosecutors before being sentenced.

The defendants are Daniel Bonventre, who ran Madoff’s broker-dealer unit; Annette Bongiorno, a Madoff employee for 40 years who ran the investment advisory business at the center of the fraud; Joann Crupi, who managed large accounts, and computer programmers George Perez and Jerome O’Hara, who allegedly automated the production of fake records.

All five have pleaded not guilty, and their lawyers said in opening statements to the jury that the government’s witnesses are willing to lie and implicate others to win a lighter sentence. Under questioning today by Randall Jackson, a prosecutor, Cotellessa-Pitz said she will only tell the truth.

Romantic Breakup

Cotellessa-Pitz, who graduated from college two years after joining Madoff’s firm, told the jury she broke up with DiPascali in 1979, upsetting him and Madoff, who she called “Bernie,” and alienating herself in the company.

“I didn’t have a lot of friends in the office,” said Cotellessa-Pitz, who was hired to help transition the company from paper to computerized accounting. “Even Bernie was kind of reprimanding me in terms of breaking off with Frank.”

Within a few years, Cotellessa-Pitz said she won over some of her colleagues, and Madoff’s company became a pleasant place to work, with many young employees falling in love, throwing bridal showers and talking with each other about wedding plans.

Cotellessa-Pitz said she became close friends with Bongiorno, who had joined Madoff’s firm straight out of high school in 1968, and that both women met their future husbands around the same time.

“It was a nice time in both of our lives,” Cotellessa-Pitz said of Bongiorno.

Wedding Guests

When Bongiorno got married in 1981, Cotellessa-Pitz went with her to pick up their wedding rings, she said. Cotellessa-Pitz said her wedding three years later was attended by Madoff, Bonventre, Bongiorno and Peter Madoff and their spouses, she testified.

Irving Picard, the trustee who’s liquidating Madoff’s company to help repay victims, sued Cotellessa-Pitz and her husband, Thomas Pitz, in 2010, seeking the return of money he claimed they received from the fraud. The U.S. Securities and Exchange Commission sued her in 2011.

According to Picard’s complaint, Cotellessa-Pitz was aware of the Ponzi scheme and made at least $3.25 million in compensation for her role, including almost half a million dollars in the year before her boss’s arrest.

The trustee alleges Cotellessa-Pitz used her accounting skills to funnel money from the investment advisory business at the heart of the fraud to Madoff’s legitimate broker-dealer unit, which was “a failing business, and operated to hide the true nature” of Madoff’s operations.

‘Irrefutable Evidence’

“Pitz had a number of roles, many of which exposed her to irrefutable evidence of fraud” at Madoff’s company, Picard said in his court papers.

Contellessa-Pitz was also responsible for providing Bongiorno with calculations that allowed Bongiorno to fabricate superficially accurate account statements, according to Picard. The trustee’s lawsuit is separate from the criminal case.

Madoff, who was arrested in December 2008, pleaded guilty to fraud and is serving a 150-year sentence.

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 elarson4@bloomberg.net

To contact the editor responsible for this story: Andrew Dunn at adunn8@bloomberg.net

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