|Erik Larson, Patricia Hurtado and Bob Van Voris|
Five former aides to
The three men and two women, hired by Madoff with little financial experience, were convicted on all counts. The defendants failed to persuade a federal jury in
Hatched in the 1970s, Madoff’s fraud targeted thousands of wealthy investors, Jewish charities, celebrities and retirees. It unraveled in 2008 when the economic crisis led to more withdrawals than Madoff could afford to pay out. In addition to
Today’s verdict, after five months of testimony and four days of deliberations, is a major victory for the U.S. government, coming in the only criminal trial brought in the five years since the scam was revealed. Madoff refused to cooperate with prosecutors.
Some clients learned they lost their life savings after Madoff’s confession and arrest on
Prosecutors began probing Madoff’s highest-ranking employees soon after his arrest. While the con man claimed to have carried out the fraud alone, several of his former workers later pleaded guilty, including his ex-finance chief,
The defendants are
“As the jury unanimously found, these five defendants played crucial roles in constructing and maintaining the house of cards that was the Madoff investment fraud,” Manhattan U.S. Attorney
The convictions “demonstrate what we have believed from the earliest stages of the investigation: this largest-ever Ponzi scheme could not have been the work of one person,” Bharara said. “The trial established that the Madoff fraud began at least as far back as the early 1970s, decades before it came to light.”
Some of the defendants lowered their heads as the verdict was read. Crupi clasped her hands while Bongiorno wrote on the verdict sheet, nodding as each count was read.
Testimony began in October with industry experts, accountants, tax employees, federal agents and former clerical staff who worked at Bernard L. Madoff Investment Securities LLC’s offices on three floors of a lipstick-shaped Midtown Manhattan skyscraper. They all gave evidence against the former employees, some of whom worked for Madoff since the 1960s and left extensive paper trails found in storage boxes, filing cabinets and 1980s-era computer systems.
The defendants were accused in a 31-count indictment of conspiring to use millions of fake account statements and false trade confirmations to trick customers into believing they owned shares in the world’s biggest companies. Instead, prosecutors said, the victims’ money was used to enrich the firm’s wealthiest clients, give conspirators exorbitant pay and bonuses and keep the Ponzi scheme afloat.
Madoff’s scam, disguised as an exclusive investment- advisory business, was made popular by its steady returns, even when the economy struggled. The success of Madoff’s broker- dealer business and his extensive ties on
The trial made public the greatest detail yet how Madoff was able to dupe the
The former colleagues got rich off the fraud, benefiting from backdated trades in their personal investment advisory accounts, as well as inflated salaries and bonuses intended to buy their loyalty and silence, prosecutors said. They used the stolen cash to buy mansions, yachts and beach homes and pay for country club memberships and private schools, prosecutors said.
Some of the defendants were also accused of disguising untaxed income as business expenses, using corporate credit cards to pay for tropical cruises, family vacations and expensive wines and meals for years without paying it back.
The jury rejected claims by the five former aides that Madoff duped them into carrying out his fraud by giving them tasks that prevented them from seeing the big picture. Several of the defendants claimed they thought the trading was taking place in
Defense lawyers argued the five co-workers were kept in the dark about the fraud and were tricked by Madoff’s personality. Crupi’s lawyer,
The U.S.’s case was bolstered by testimony from five of former Madoff employees who pleaded guilty and agreed to cooperate, including the former finance chief, DiPascali, who spent 17 days on the witness stand.
The case is U.S. v. O’Hara, 10-cr-00228,
|Copyright:||(c) 2014 Financial Planning. All rights Reserved.|
|Source:||Source Media, Inc.|