Former Madoff Lieutenant Sees Nothing Wrong With Backdating Trades

Former Madoff Lieutenant Sees Nothing Wrong With Backdating Trades

Former Bernie Madoff secretary Annette Bongiorno, a key participant in the largest fraud scheme in US history, appears as a short, dawdling woman of almost 200 pounds.  But the 40 year employee, who “unwillingly” rose through the ranks of Madoff’s investment advisory firm, had one key benefit to Madoff: she was loyal and didn’t ask a lot of questions.

“I loved Bernie”

“I loved Bernie,” Bongiorno said in court testimony yesterday. “He was like my big brother. I had a lot of respect for him.”

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On a daily basis, Bongiorno played a key role in concealing Madoff’s fraud.  She used historical price records to back-date trades on customer statements which would total a pre-determined return.

Lack of education had a value

Bongiorno’s defense team is claiming Madoff discouraged her from obtaining further education and that he specifically hired less educated people to work in his office so as to perpetrate the fraud.  Bongiorno, who was a wide-eyed 19 year old when she joined the firm, said Madoff told her she didn’t need industry education and that “everything you need to know, I’ll teach you,'” Bongiorno testified. “He didn’t want me to go back to school.”

When asked on the stand if she found it strange to be entering trades after the fact, a key element in the fraud, Bongiorno said “no, they were always back-dated.”  In the securities brokerage business, time stamping a trade when it occurs is a key component typically reviewed by regulators on inspections.  Bongiorno said she thought the trades were big block trades that customers had requested to have the time stamps back dated.

“I only wanted to be a secretary”

Bongiorno never had big ambitions. “I only wanted to be a secretary,” she said in testimony. “I didn’t like working with numbers. It’s not what I wanted to do.”  There were multiple times when Bongiorno quit the firm, almost playing hard to get with Madoff, who always came running back to get her.  “He said whatever he had to say to get me to come back,” she testified. Madoff paid for Bongiorno’s honeymoon, for instance. Once Madoff when to dinner at Bongiorno’s parent’s house after Bongiorno’s traditional father became upset by her long hours and encouraged her to quit.  At another point in the early years, she quit when Madoff hired a secretary, but returned to the firm when Madoff personally met her at a diner in Queens and pleaded with her to return to the fold.

Just before Bongiorno’s testimony, the defense called former Madoff investor and longtime Bongiorno friend Isaac Maya, who testified that Bongiorno is “a very honest person, a credible person” who “admired” her boss.

While testifying in your own defense can be risky, it may have already paid off for Bongiorno, who had two charges dropped by prosecutors last week as she testified.  Bongiorno is one of five top Madoff lieutenants on trial.

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Mark Melin is an alternative investment practitioner whose specialty is recognizing a trading program’s strategy and mapping it to a market environment and performance driver. He provides analysis of managed futures investment performance and commentary regarding related managed futures market environment. A portfolio and industry consultant, he was an adjunct instructor in managed futures at Northwestern University / Chicago and has written or edited three books, including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008). Mark was director of the managed futures division at Alaron Trading until they were acquired by Peregrine Financial Group in 2009, where he was a registered associated person (National Futures Association NFA ID#: 0348336). Mark has also worked as a Commodity Trading Advisor himself, trading a short volatility options portfolio across the yield curve, and was an independent consultant to various broker dealers and futures exchanges, including OneChicago, the single stock futures exchange, and the Chicago Board of Trade. He is also Editor, Opalesque Futures Intelligence and Editor, Opalesque Futures Strategies. - Contact: Mmelin(at)

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