Bernie Madoff’s Ponzi scheme was the backbone of his entire business, according to a forensic accountant that has gone through the company’s books. Madoff, and more importantly Madoff’s employees, have argued that only he was aware of $65 billion worth of fraud. The claim has been met with skepticism, to be mild, but now there is some evidence that the fraud was indeed systemic, reports FINalternatives.

Madoff

Accountant Bruce Dubinsky went through Madoff’s books on behalf of liquidator Irving Picard and concluded that Bernard L. Madoff Investment Securities was a complete scam, not an investment firm with a scam running alongside. He found that money from the Ponzi scheme was transferred to other units on a regular basis and that the other units’ records were falsified.

Madoff employees

“That’s customer money—the most sacred account in an investment-advisory business,” Dubinsky said, testifying against five of Madoff’s former colleagues. “You can’t stick your hand in the piggy bank and use it for other means.”

Fifteen former Madoff employees have been accused of aiding and abetting the Ponzi scheme, and five of them are currently standing trial: Annette Bongiorno, Daniel Bonventre, Joann Crupi, Jerome O’Hara and George Perez. They all say they are innocent and that Madoff hired them because they were inexperienced and unable to see through Madoff’s deceptions, but according to Dubinsky, “things would appear and disappear—it was smoke and mirrors with account statements.”

Madoff’s fraudulent activities

The defense has been arguing that there was a clear distinction between Madoff’s fraudulent activities and the legitimate business, but unless something surprising comes out during the cross-examination of Dubinsky, that probably won’t hold. It’s one thing to say you don’t know what’s happening in another part of the company, but claiming that money appeared and disappeared in accounts you were responsible for is going to be a hard sell.

Of course, Dubinsky’s testimony is relevant for the next ten former employees waiting for trial. No one is likely to get a sentence as severe as Madoff himself, 150 years, but this still seems like a good time to dust off those negotiation skills and try to work something out.