Madoff Ex-Aide Who Balanced Checkbook Says His Role Was Limited

Bernard Madoff’s former director of operations told a jury he wasn’t responsible for the investment advisory unit at the center of the con man’s $17 billion fraud, even though he balanced its checkbook and paid its salaries and expenses.

Daniel Bonventre, one of five ex-Madoff aides on trial, testified in Manhattan federal court today that his role was limited to running the company’s broker-dealer business. He said he never asked Madoff why he was also responsible for managing the investment advisory unit’s bank account, which held hundreds of millions of dollars in stolen customer cash.

“You never talked about it?” Assistant U.S. Attorney Randall Jackson asked on the third day of cross-examination.

“No, I wouldn’t have asked that question,” Bonventre replied.

The criminal trial, now in its fifth month, is the first stemming from the fraud, which collapsed after Madoff’s arrest in December 2008. Madoff, 75, is serving a 150-year sentence in North Carolina after pleading guilty in 2009. Bonventre, who worked for Madoff for 40 years, denies involvement, saying he was duped by his former boss.

Bonventre said he was one of two employees who spent decades managing the investment advisory unit’s account with JPMorgan Chase & Co. (JPM), where Madoff held customer money instead of using it to buy securities. The other employee was Madoff’s wife, Ruth, he said.

Jurors Laughed

Under questioning from Jackson, Bonventre said he performed other duties for the investment advisory business, including ordering forms used in daily operations and preparing a stock-record form for it and the broker-dealer business.

Another Madoff employee, Frank DiPascali, who pleaded guilty and testified against his ex-colleagues, was sometimes viewed among employees as the actual operations director of the investment advisory unit, even though he was chief financial officer of the entire firm, Bonventre said.

At one point, several jurors laughed and looked at one another when Bonventre failed to answer questions with a yes-or-no response, as the prosecutor and judge repeatedly asked him to do.

Pressed for an answer, Bonventre couldn’t explain why, during a U.S. Securities and Exchange Commission probe in March 2005, he omitted the JPMorgan account in an e-mail listing the company’s bank accounts.

Deleted Accounts

Nor did he explain why he’d helped delete accounts linked to the investment advisory unit from the company’s profit-and-loss records for the previous three months. Jackson displayed copies of documents with his handwriting on three edited versions.

Bonventre denied carrying out any duties for the investment advisory unit until Jackson showed him documents jogging his memory.

Bonventre took the stand on Feb. 18 after initially telling the judge he wouldn’t testify. Prosecutors are seeking to portray him as a liar whose testimony can’t be believed.

On direct examination, Bonventre denied knowing anything about the Ponzi scheme, which prosecutors allege the group supported with millions of fake trades and false account statements that tricked customers into believing they owned securities. No trading took place in the investment advisory business.

Family Watching

Bonventre earlier told jurors that when he questioned some of Madoff’s unusual business practices, his boss gave answers that sounded plausible or sent Bonventre on a “wild goose chase” to make it appear that Madoff wanted to fix flaws.

The other defendants are Joann Crupi, who managed large accounts; computer programmers George Perez and Jerome O’Hara, accused of writing code to automate the deception as the scheme expanded rapidly in the 1990s; and Annette Bongiorno, who ran the day-to-day business of the investment advisory unit.

The courtroom, the largest in the courthouse, was nearly full with spectators during yesterday’s testimony. Bonventre’s family is among those watching him on the stand.

Trial testimony may end this month, the judge said.

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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