The Bernard Madoff aide who ran his investment advisory business had seven personal accounts with purported balances totaling almost $70 million when the firm collapsed, far more than she was paid, a jury was told by prosecutors seeking to show her incentive to hide the fraud.
Annette Bongiorno, hired by Madoff in 1968, when she was 19, earned a total of $3.91 million during the period from 1993 to 2008, the only years that documentation for her salary was available, Jason Wake, a Federal Bureau of Investigation forensic accountant, testified yesterday in Manhattan federal court in the trial of five ex-members of Madoff’s inner circle.
Bongiorno “made no attempt to conceal her deposits or withdrawals,” her lawyer, Roland Riopelle, said during his cross-examination of Wake. The figures didn’t include the taxes she paid on her earnings or compare the accounts’ rising value to the stock market’s performance, Riopelle said.
The trial, which started in October, is the first stemming from Madoff’s $17 billion Ponzi scheme, which collapsed after his confession and arrest in December 2008. Bongiorno and four other former Madoff employees are accused of aiding the fraud for decades and getting rich in the process.
Prosecutors allege Bongiorno helped create fake trading confirmation tickets and false account statements to trick customers and regulators. No trading took place at the unit, where account holders benefited from back-dated trades to reach pre-determined annual earnings, the U.S. has said.
Prosecutors are telling the jury about Bongiorno’s large withdrawals to illustrate her alleged financial motive to keep the fraud going, Riopelle said in a court filing on Jan. 20. He said the data doesn’t prove anything that hasn’t already been proven -- that the fake trading provided a windfall.
Wake’s charts of the former executive’s earnings and withdrawals “prove nothing that the government has not already proven. And proven. And proven again. And that Ms. Bongiorno has never disputed,” Riopelle said in the filing. It’s “a waste of time.”
Wake testified that Bongiorno withdrew $14.5 million from her own accounts from 1977 to 2008. From the time she opened her first account in 1975, with a $1,000 deposit, she took out $13.6 million more than she put in, Wake said. In 2008 alone, the last year of the scheme, Bongiorno withdrew $3.72 million more from her accounts than she put in, according to Wake.
Bongiorno argues she was duped by Madoff into believing she worked for a legitimate company, and that she wasn’t educated in the securities industry and didn’t realize the firm’s practices were unusual.
Joann Crupi, another defendant who managed large accounts for Madoff, spent thousands of dollars on personal expenses using her corporate credit card during a six-year period, an investigator with the Internal Revenue Service, William Duffin, testified Jan. 22. Crupi is accused of tax evasion, among other charges, for not declaring the money she spent as income received from the con man.
Crupi’s lawyer, Eric Breslin, has said Madoff didn’t have rules for credit card use, and that his client didn’t realize she was doing anything wrong by engaging in a practice that was standard at the company.
The other defendants in the case are Daniel Bonventre, who oversaw the broker-dealer and proprietary trading operations where real trading took place, and George Perez and Jerome O’Hara, computer programmers accused of writing code to create fake documents.
Madoff, 75, pleaded guilty to fraud in 2009 and is serving a 150-year sentence at a federal prison in North Carolina. Seven of his employees also pleaded guilty to crimes associated with the con man’s operations.
The case is U.S. v. O’Hara, 10-cr-00228, U.S. District Court, Southern District of New York (Manhattan).