Dead Madoff Executive Blamed for Deceptive Computer Code

Photographer: Jin Lee/Bloomberg

Bernard Madoff, 75, is serving a 150-year sentence at a federal prison in North Carolina. Close

Bernard Madoff, 75, is serving a 150-year sentence at a federal prison in North Carolina.

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Photographer: Jin Lee/Bloomberg

Bernard Madoff, 75, is serving a 150-year sentence at a federal prison in North Carolina.

Bernard Madoff’s former chief information officer, who died 10 months before the con man’s arrest, was responsible for the company’s deceptive computer code and related projects, not two ex-programmers on trial, a defense lawyer told jurors.

Liz Weintraub, the former boss of defendants Jerome O’Hara and George Perez, helped write and develop Madoff’s computer code more than a decade before the men were hired and oversaw programs to create fake reports and delete company e-mails as Madoff’s $17 billion Ponzi scheme grew, the lawyer, Gordon Mehler, said in his closing statement today in the trial of five former Madoff aides.

“Her presence has invaded these proceedings like a ghost,” Mehler said in Manhattan federal court. “Maybe it’s true one should never speak ill of the dead, but that’s Liz Weintraub.” Weintraub died in February 2008, 10 months before the firm’s collapse.

Mehler said the prosecution has sought to downplay Weintraub’s involvement in order to focus blame on her former underlings. Witnesses testified she was a strict boss who was making about $500,000 a year at the time she died. The bad code created fake account statements and false trade confirmations to trick customers and regulators, prosecutors said.

Key Witness

Mehler reminded the jury that the government’s key witness, Frank DiPascali, Madoff’s ex-finance chief who pleaded guilty in the case, testified Weintraub was closely involved in the programs, and another government witness said she helped write and develop Madoff’s computer code in the late 1970s and early 1980s.

O’Hara and Perez joined Madoff’s firm in the 1990s. DiPascali testified Weintruab conspired with Madoff’s brother, sons and niece to remove e-mail files and “reinstall them into the computer network as if they had never been tampered with,” according to a transcript of his testimony displayed for jurors today.

The trial is the first stemming from Madoff’s scheme, which collapsed after his confession and arrest in December 2008. O’Hara, Perez and three other former Madoff employees went on trial in October over accusations they aided the fraud for decades and got rich in the process.

Diamond Story

Mehler told jurors yesterday that DiPascali admitted he lied to the computer programmers about the nature of the work he asked them to do and never told them the trading was fake.

The lawyer mocked DiPascali’s claim that O’Hara and Perez sought hush-money from Madoff in the form of diamonds after realizing in 2006 that their programming skills were crucial to the fraud.

“Ahhh! Diamonds!” Mehler said yesterday. “The prosecution loves the diamonds story because it’s inflammatory.”

Mehler said the programmers confronted Madoff in 2006 after becoming uncomfortable with some of the programs they were writing that could alter old documents. The men didn’t seek extra money and continued to work at Madoff’s firm because they didn’t know where else to go, he said.

Repaid Loan

The lawyer also asked the jury to question why O’Hara would repay a loan to Madoff of more than $600,000 around the same time if he were trying to extort their former boss. Copies of the checks O’Hara wrote to Madoff were displayed for the jury.

Mehler compared the programmers to other former Madoff workers who unwittingly aided the fraud by carrying out their duties and were never accused of wrongdoing, including ex-clerical staff who testified against their former bosses.

U.S. District Judge Laura Taylor Swain, who is presiding over the trial, said the jury should begin deliberations by March 14.

The other defendants in the trial are Daniel Bonventre, Madoff’s former operations director who ran the broker-dealer unit; Annette Bongiorno, who ran the investment advisory business; and Joann Crupi, who managed large investment-advisory accounts.

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 editors responsible for this story: Michael Hytha at mhytha@bloomberg.net Mary Romano, Andrew Dunn

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