Madoff Employees Found Guilty Of Fraud


After a nearly six month trial of former employees of convicted Ponzi schemer Bernie Madoff, a New York jury handed a sweeping victory to prosecutors by finding all defendants guilty on all charges.

Madoff’s employees: After four days of deliberation, guilty on all counts

After four days of deliberation, the jury returned guilty verdicts including conspiracy to defraud investors and securities fraud.  The defendants – two trading managers, two computer programmers and the firm’s director of operations – came as U.S. Attorney for the Southern District of New York Preet Bharara indicated in a statement that Madoff’s Ponzi scheme may have dated back to the 1970s.

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Portfolio managers Annette Bongiorno and JoAnn Crupi were convicted of altering phone trading records.  Bongiorno was profiled in a previous ValueWalk article where she seemed to claim ignorance to the sophisticated scheme, claiming she saw nothing wrong with backdating trades. The jury also found computer programmers Jerome O’Hara and George Perez guilty of creating phony customer accounts and former operations manager Daniel Bonventre helped doctor records.

Four years ago, Madoff was sentenced to 150 years in prison.  He has insisted the scheme started after Long Term Capital occurred in the late 1990s and that he carried out the Ponzi scheme on his own, both claims which have been refuted by prosecutors.

Many former Madoff employees testified in court, including the government’s star witness Frank DiPascali Jr., the former chief financial officer and 33-year Madoff employee. DiPascali, who testified for more than a month, told jurors he worked with all five defendants to produce the fraudulent records.

Sweeping government victory, the second Wall Street jury trial in less than a year to end positively from prosecutors

The sweeping victory for government prosecutors comes after once high flying Goldman Sachs mid-level executive Fabrice Tourre, known as “Fabulous Fab,” was found guilty in a civil trial for his role in sub-prime mortgage products at the center of the 2008 stock market crash.   Like the case against Madoff’s employees, the case against Fabulous Fab was considered complex and legal watchers were unsure of the outcome.  The jury in convincing fashion sided with prosecutors in both cases.

“The trial established that the Madoff fraud began at least as far back as the early 1970s, decades before it came to light,” Bharara said in a statement, then sounding like an old school sheriff seeking justice he concluded:  “The scheme these defendants helped perpetrate cost innumerable investors their life savings. Now it likely will cost the defendants their freedom.”

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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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