Two longtime Madoff employees arrested and charged
NEW YORK (Reuters) - Two members of imprisoned financier Bernard Madoff's inner circle were arrested on charges of conspiring in the largest financial fraud in history and helping to conceal it, U.S. prosecutors said on Thursday.
The indictments of former employees Jo Ann "Jodi" Crupi, 49, and Annette Bongiorno, 62, brings to eight the number of people criminally charged since the December 2008 revelation of Madoff's multibillion-dollar decades-long fraud.
Hours after the two women were arrested at their homes, Manhattan U.S. Attorney Preet Bharara hinted at more arrests and criminal charges in the case. The fraud shook investor confidence in market regulators who missed Madoff's epic swindle despite repeated warnings.
"Together with our law enforcement partners at the FBI and Internal Revenue Service, we will press on with this investigation, which remains very much ongoing," Bharara said in a statement.
Madoff, 72, is serving a 150-year prison sentence after pleading guilty in March 2009. He insisted he acted alone.
A court-appointed trustee has sued Madoff's brother, wife, two sons and a niece over allegations they should have known about the massive Ponzi scheme, but none of them has been criminally charged.
Prosecutors and the trustee say that between $21.2 billion and $65 billion of investor money vanished in the now defunct Bernard L. Madoff Investment Securities LLC. Thousands of investors, large and small, lost money worldwide.
A Ponzi scheme is one in which early investors are paid with the money of new clients. Madoff's swindle was by far the largest ever. Several other Ponzi schemes, involving hundreds of millions of dollars, also collapsed under the weight of the market meltdown in 2008.
"Year after year, Annette Bongiorno and Jo Ann Crupi protected and perpetuated the Madoff mirage, while putting very real money in their own pockets," Bharara said in announcing the conspiracy, securities fraud, tax evasion and other charges. The securities fraud charge alone carries a maximum possible prison term of 20 years.
Bongiorno worked at the Madoff firm for 40 years and Crupi was employed there for 25 years.
The indictment said that about a week before Madoff's December 11, 2008 arrest, Crupi and Madoff's longtime right-hand man, Frank DiPascali, met on a street corner near their office to discuss the firm's imminent collapse.
Days later, DiPascali and Crupi discussed what they would tell law enforcement authorities, the court papers said.
"Crupi told DiPascali that she was going to say that she thought that the trades executed on behalf of the investment advisory clients were being done overseas," according to the indictment filed in U.S. District Court.
Crupi was arrested by FBI agents at her home in Westfield, New Jersey. A Manhattan federal court magistrate judge set bail at $5 million, including $2 million cash, and ordered electronic monitoring. Crupi is to be detained until she has two co-signors for bail.
Crupi's lawyer, Eric Breslin, told reporters: "We knew all of this was coming and are prepared to meet these charges and disprove them."
Bongiorno was arrested in Boca Raton, Florida and appeared before a judge in West Palm Beach. A bond hearing was scheduled for Monday. Her attorney, Nina Stillman Mandel, said that her client would be returning to New York to face the charges.
The U.S. Securities and Exchange Commission, which has been harshly criticized for not acting on tips about Madoff's scheme, filed separate civil charges against the women.
They were part of a tightly knit, secretive inner circle at the investment advisory business managed by DiPascali, according to court papers. DiPascali pleaded guilty in August 2009 to several charges and has cooperated with prosecutors. He is under house arrest.
The investment advisory arm worked on a separate floor from the rest of the business and included Madoff, DiPascali, Bongiorno, Crupi, operations manager Daniel Bonventre and two computer programmers, Jerome O'Hara and George Perez, according to court records.
They accepted investor's money and paid redemptions, all the while fabricating account statements, prosecutors charged. Under Madoff's guidance, they put data into a special computer dubbed "House 17" of a chosen basket of stocks and printed false documents purported to confirm purchases of securities when in fact, no trades were made.
Bonventre, O'Hara and Perez have pleaded not guilty and are awaiting resolution of their cases.
Bongiorno managed hundreds of accounts purportedly having a balance of about $8.5 billion as of November 2008, prosecutors said. Crupi managed accounts with a purported balance of $900 million, and she tracked the daily activity of a bank account into which billions of dollars of client money was deposited. Redemptions were paid from the same account.
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