Ex-Madoff Employee Tells Jury of ‘Cut And Paste’ Trades
By Erik Larson – Oct 25, 2013 12:01 AM ET
An ex-employee of Bernard Madoff on trial for allegedly aiding his $17 billion fraud oversaw backdating of trades for account statements that sometimes featured “cut and paste” data, a former assistant told a jury.
Annette Bongiorno, who worked for Madoff for 40 years and helped run the investment-advisory business at the heart of the Ponzi scheme, would request trade dates and prices as much as a year old be used on account statements to reach pre-determined profit goals for customers, and cut out and tape typed trades onto their statements, Winnie Jackson, the defendant’s former assistant, testified yesterday in federal court in Manhattan.
Annette Bongiorno worked for Madoff for 40 years and helped run the investment-advisory business at the heart of the Ponzi scheme. Photographer: Rick Maiman/Bloomberg
Bongiorno gave “very little explanation” when asked how the company’s trading strategy worked, and Jackson didn’t realize anything she was doing was fraudulent while she was following orders, she said.
Jackson said she never saw Bongiorno “cut and paste” account statements, though she said her former boss oversaw the creation of the statements and the practice wasn’t uncommon or unusual. She said tape was used, rather than paste.
Prosecutors showed Jackson and the jury examples of such statements, which included hand-written notes that Jackson identified as Bongiorno’s. The example included “pasted” trades for Microsoft Corp. in 2004.
Bongiorno and four other former Madoff employees are accused of conspiring for decades to hide Madoff’s fraud by creating millions of fake documents to trick customers and regulators. Prosecutors are calling former workers, including some who have pleaded guilty, to testify against them.
Also on trial are Daniel Bonventre, who oversaw Madoff’s broker-dealer and proprietary trading units; computer programmers George Perez and Jerome O’Hara and Joann Crupi, who managed large accounts and worked closely with Bongiorno and Jackson.
Jackson testified Oct. 23 that her job included collecting historical trade data and prices for specific stocks over past weeks or months, and sometimes as long as a year, so that customer account statements could include backdated trades to reach specific profit requests sought by Bongiorno.
Jackson, who started working for Madoff in the 1980s, told the jury she also helped execute withdrawal requests for Bongiorno directly from her account, usually amounting to $2,500 in cash once or twice a month that she would personally deliver to her then-boss.
Jackson is the fifth witness to testify in the first criminal trial stemming from the world’s biggest Ponzi scheme, which deprived investors of $17 billion in principal and billions more in fake profit. U.S. District Judge Laura Taylor Swain said the trial may last as long as five months.
Prosecutors yesterday showed Jackson a printout of a Madoff customer document for the Picower Foundation that included a handwritten note saying “Fake Sales” at the top of one page and several handwritten numbers interspersed with printed ones. Jackson identified the writing as belonging to Bongiorno.
Jeffry Picower, who died in 2009, had been an investor with Madoff since the 1970s; his estate agreed to a $7.2 billion settlement with the U.S. and the trustee liquidating the Madoff firm.
Under cross-examination, Bongiorno’s lawyer, Roland Riopelle, showed additional pages from the same document, including another handwritten note on the last page that said to “cancel” the trades because they were being used to check for percentages.
Riopelle asked Jackson if, in her experience, the document appeared to be “nefarious,” prompting the U.S. to object over a witness being asked to opine about a document. Swain permitted the question, to which Jackson answered, “No.”
After the jury left, Riopelle told the judge the “Fake Sales” evidence was “particularly toxic” without Jackson’s interpretation.
Riopelle asked Jackson to identify a sample of about a dozen notes that had been handwritten by Bongiorno on a variety of printed documents about customers’ purported trades. Jackson agreed with Riopelle that the notes showed her former boss regularly sought Madoff’s direct approval or instruction before taking action on trading activity that later turned out to be fake.
The notes said, “Need to check with Bernie” and “Don’t do yet. Bernie will say when to do” and “Don’t do anything until I talk to BLM,” using his initials, according to documents shown to Jackson and the jury.
Defense lawyers argued during opening statements that Madoff trained his employees beginning when they were young and inexperienced so they would help carry out his fraud without knowledge and without training in the securities industry. Bongiorno joined Madoff’s company straight out of high school when she was 19 years old.
Earlier witnesses testified that Bonventre wrote company checks to himself as a “vendor” for tens of thousands of dollars about once a year, and that Crupi used her corporate credit card to pay for family trips to Walt Disney World. All five former employees deny wrongdoing and say Madoff duped them for years.
Madoff, 75, admitted to federal agents in December 2008 that his company was a sham. He pleaded guilty to 11 counts and was sentenced to 150 years in prison. He claimed all along that he worked alone and refused to implicate anyone else.
The case is U.S. v. O’Hara, 10-cr-00228, U.S. District Court, Southern District of New York (Manhattan).
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