Five former aides to Bernard Madoff on trial accused of taking part in his $17 billion Ponzi scheme argue a 2007 video of the con man telling an audience about the “impossibility of committing fraud” will show his skill at lying, bolstering their claim they were duped into helping him.
Madoff in October 2007 told a New York conference on the future of the stock market that securities fraud had been made impossible by the regulatory environment at the time. The video shows the “aura of utter normality” displayed by Madoff when he lied about fraud, Eric Breslin, one of the defense lawyers, wrote in a filing yesterday in federal court in Manhattan.
“We seek to illustrate for the jury what these defendants saw, what the SEC saw, what KPMG saw, and what countless others saw when Mr. Madoff perpetuated his lies with ease and practice in the days when his reputation and his word were unimpeachable,” Breslin wrote.
U.S. District Judge Laura Taylor Swain, who is overseeing the trial, the first in a Madoff-related criminal case, will decide whether the video can be shown to the jury. The defense cases may begin as soon as today after prosecutors rested following four months of testimony from dozens of witnesses.
The video was taken around the time Madoff duped inspectors from the U.S. Securities and Exchange Commission and the auditing company KPMG, 14 months before the scheme collapsed. The government alleges the former employees helped Madoff trick regulators. The group claims their former boss conned them into it.
“This was not a man whose palms sweated or who twitched when he lied,” Breslin said.
The government didn’t immediately reply to his request.
Madoff, 75, arrested in December 2008, is serving a 150-year sentence in a federal prison in North Carolina.
The defendants are Annette Bongiorno, who ran the investment advisory unit at the center of the fraud; Joann Crupi, who managed large accounts and is represented by Breslin; Daniel Bonventre, the ex-operations chief of Madoff’s broker-dealer unit; and computer programmers George Perez and Jerome O’Hara, accused of writing code to automate the deception as the scheme expanded in the 1990s.
Prosecutors accuse the group of using millions of fake trading confirmations and false account statements to trick customers into believing their money was being used to buy securities. No trading took place in the investment advisory business, where the fraud allegedly started in the early 1970s.
Bonventre today stood in court to tell Swain he had decided not to testify in his defense. The other defendants must make similar decisions. Criminal defendants aren’t required to testify and their lawyers haven’t said if they will.
Rebecca Baskin, a paralegal with the U.S. Attorney’s Office in Manhattan and the U.S.’s final witness in the case, testified today about Bonventre’s use of his corporate American Express card to buy non-work related items, including 12 bottles of wine for $1,825 from Chateau Boswell Winery in St. Helena, California, and dozens of cigars from a shop in St. Bart’s for $877.
Bonventre’s personal e-mails in which he ordered the items, all from 2007, were displayed for the jury.
“It’s a birthday gift,” Bonventre said in an e-mail ordering cigars. “Please charge my Amex.”
The U.S. alleges that in addition to aiding the Ponzi scheme for decades, three of the former aide didn’t pay taxes on millions of dollars personal credit-card expenses.
Defense lawyers gave a preview of their case in opening statements to the jury in October, saying the five co-workers were kept in the dark about the fraud and tricked by Madoff’s personality and reputation. At the time, Breslin compared Madoff to “the Great Oz” hiding behind a curtain with his employees seeing him as “almost a god.”
The defendants pleaded not guilty and claim Madoff duped them by hiring them when they were young and inexperienced. Bonventre started working for Madoff in the 1960s, when he was 22. Bongiorno was hired after high school in 1968. The others were brought in after college or before they worked in the securities industry, their lawyers have said.
Madoff pleaded guilty to fraud in 2009. At least seven others pleaded guilty, including his brother Peter Madoff, who is serving a 10-year term.
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 federal court in New York at firstname.lastname@example.org.
To contact the editor responsible for this story: Michael Hytha at email@example.com.