Bloomberg Anywhere Remote Login Bloomberg Terminal Demo Request


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Madoff Aides’ Jury Can Watch Him Say Fraud Impossible

A video of Bernard L. Madoff in 2007 telling a New York conference that fraud on Wall Street was “virtually impossible” may be shown to a jury in the trial of five of the con man’s former employees, a judge ruled.

U.S. District Judge Laura Taylor Swain, who is overseeing the first criminal trial stemming from Madoff’s $17 billion Ponzi scheme, today rejected a bid by prosecutors in Manhattan to block the recording on the grounds that it was irrelevant and would confuse jurors.

The group’s lawyers are seeking rulings on what they can include in their defense cases in the trial that started in October and may end this month. The lawyers argue the video shows Madoff’s skills at lying, bolstering their claim he duped his staff into helping carry out the swindle.

“No amount of testimony can paint that picture quite so clearly as a few seconds of Bernard Madoff himself,” Eric Breslin, one of the defense lawyers, said in a court filing today before the ruling was handed down. “This proposed exhibit is the only thing available to the defense to make this point.”

Madoff in October 2007 told a conference on the future of the stock market that securities fraud had been made impossible by the current regulatory environment. At the time, Madoff’s Ponzi scheme had been running for about three decades and would collapse 14 months later.

Defense Case

The bid to show the video at the trial is being led by Breslin, the lawyer for Joann Crupi, who managed large accounts in Madoff’s investment advisory business.

The video goes to the “heart” of the defense’s case, Breslin said in the filing.

Swain, in her one-page ruling, agreed jurors should see it because it had value as evidence.

“The clips are admitted as relevant exemplars of remarks by Mr. Madoff concerning the securities industry, regulation and the business of Madoff Securities, and his demeanor while making the remarks,” Swain said.

In court filings yesterday, prosecutors argued that there’s no proof Madoff used the same demeanor shown in the video to trick his employees or regulators. The defense lawyers also can’t prove that Madoff was actually lying in the video, the U.S. said.

Widely Viewed

“By and large, in today’s regulatory environment, it’s virtually impossible to violate rules,” Madoff said in the video, which was widely reported and viewed online after his arrest on Dec. 11, 2008. “This is something that the public really doesn’t understand.”

The video shows the “aura of utter normality” displayed by Madoff when he lied, Breslin wrote. “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.”

The video was taken around the time Madoff duped inspectors from the U.S. Securities and Exchange Commission and the auditing company KPMG.

The video was made at the Philoctetes Center for the Multidisciplinary Study of the Imagination, a now-defunct organization that arranged public discussions and exhibits on a variety of topics, including finance. The center’s benefactor foundation invested with Madoff, and the group’s website says it’s been discontinued due to “insurmountable budget shortfalls.”

Answered Questions

During the event, Madoff is seated casually in a chair, wearing a suit with no tie and answering questions about his market-making business and other elements of his operation.

In the video, Madoff also talks about various aspects of the SEC’s operations, saying the regulator was reactionary when it came to market events and sometimes called him for advice.

“I’m very close with the regulators, so I’m not saying that what they do is bad. As a matter of fact my niece just married one,” Madoff said in the video.

Eric Swanson, a former assistant director in the Office of Compliance Inspections and Examinations, met Shana Madoff, who worked for her uncle, in April 2003 when the regulator was examining Madoff’s operations. Swanson left the SEC in September 2006 and married Shana Madoff a year later.

Personal Expenses

The part of the video showing Madoff’s discussion of his niece won’t be shown the jury, Breslin said in court filings.

Breslin also told Swain in a filing yesterday that all the tax-evasion charges against Crupi should be dismissed because the U.S. had failed to prove she had improperly used her corporate American Express card for personal expenses.

“The government’s allegations are supported by only inference, speculation and the ‘wink-wink, nudge-nudge’ colloquy and questioning” by prosecutors, Breslin wrote.

He said the tax claims should have been dealt with separately from the underlying conspiracy charges because they would bias the jury against her.

Madoff, 75, arrested after his confession to the scam in December 2008, is serving a 150-year sentence in a federal prison in North Carolina. He told a judge during his plea hearing that he’d carried out the fraud on his own.

False Statements

The other defendants are Annette Bongiorno, who ran the investment advisory unit at the center of the fraud; 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.

In opening statements to the jury, defense lawyers said the five co-workers were kept in the dark about the fraud and were fooled 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.”

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).

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.