The woman who ran Bernard Madoff’s fraudulent investment advisory business broke into tears as she told a jury how the con man shouted and threw her out of his office for trying to retire in the mid-1990s.
Annette Bongiorno, on trial with four ex-colleagues accused of aiding a $17 billion Ponzi scheme, testified yesterday that Madoff ``went nuts” and cursed at her after hearing her plan to quit and live full-time in her new vacation home in Boca Raton, Florida.
“He went crazy on me,” said Bongiorno, who joined Madoff’s New York-based securities company in 1968 as a 19-year-old secretary, during her second day on the witness stand. “I was completely shook.”
The criminal trial, now in its fifth month in Manhattan federal court, is the first stemming from the scheme, which collapsed after Madoff’s arrest in December 2008 revealed the trading in his investment advisory unit was fake. Bongiorno is the second defendant to testify.
Bongiorno and the others, who spent decades as part of Madoff’s inner circle, say they were duped into participating in the scheme. Defense attorney Roland Riopelle has said that Madoff was desperate to keep Bongiorno at his company because her ignorance of the industry and willingness to follow orders blindly were vital to keeping the scam going.
Prosecutors allege Bongiorno was central to the scam's success and is feigning ignorance to avoid as long as 58 years behind bars. She got rich off the fraud and must have known backdating trades and faking reports was wrong, the U.S. says.
Yesterday, Bongiorno, 65, told jurors she decided to retire in the early 1990s after she and her husband, Rudy, bought a Florida home and her mother died. She said her relationship with Madoff changed after the encounter in his office.
“I just couldn’t believe he’d said that to me after 25 years,” Bongiorno said, crying.
Madoff met with Bongiorno the next day and sought to smooth things over, saying her departure was “unacceptable,” she testified. When she agreed to stay, Madoff said, “Come on Annette, no hard feelings,” she testified.
Under a deal they worked out, Bongiorno spent two weeks working in New York and two weeks in Florida -- a routine she kept for years. She took the train 18 to 20 hours each way because she was afraid to fly, she said.
Bongiorno answered a suggestion by prosecutors that her paid time in Florida was a perk for conspiring with Madoff. While there, she said, she was on-call “24-7” and kept in regular contact with her staff in New York, as well as Madoff’s customers.
Bongiorno detailed for jurors her lack of knowledge of the firm’s operations and dependence on Madoff for direction.
Asked about audits by the U.S. Securities and Exchange Commission, during which she helped prepare fraudulent paperwork, she said she didn’t know the documents contained false information.
“Bernie only told me what he needed to tell me,” she said.
Riopelle asked why Bongiorno took so many hand-written notes containing directions from Madoff. Many of the notes contained data for backdated trades, a process she said she didn’t know was illegal.
“My memory’s not so good,” she said.
Bongiorno, who managed the biggest investment advisory clients and oversaw a team of clerical staff who prepared trade confirmations and customer statements, said she didn’t understand market strategy and never talked about such things with customers.
“If they asked me a question, I was lost,” she said.
Bongiorno told jurors that Madoff didn’t give her a raise from 1996 and 2006, when he agreed to increase her salary from $200,000 to $342,000. Earlier, prosecutors suggested the boost was part of Madoff’s bid to keep her quiet.
Court was postponed midday yesterday after a juror suffered breathing problems and left the courtroom gasping for breath and using an inhaler. U.S. District Judge Laura Taylor Swain, who is overseeing the trial, said later that the woman would be alright.
The trial is expected to resume today. Defense lawyers said their case may end next week, followed by closing arguments and deliberations.
Bongiorno and her four ex-colleagues say Madoff sought out employees who didn’t have experience in the industry and could be molded to do things his way. On Feb. 24, she testified that she backdated customer trades almost every day and didn’t realize it was wrong.
Madoff’s use of historical buy-and-sell dates to reach pre-determined profits was standard procedure, she said. During her 40 years at the company, no one suggested the process was a scam, said Bongiorno, who told jurors she lacked a college degree.
Prosecutors say the group conspired for decades to create millions of fake trade confirmations and account statements, tricking thousands of victims into believing their deposits were used to buy securities. Instead, the money was placed in a single bank account that paid withdrawals, financed operations and enriched employees, the U.S. says.
Madoff, 75, is serving a 150-year prison sentence in North Carolina after pleading guilty in 2009.
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 email@example.com