NEW YORK Feb 24 (Reuters) - Longtime Bernard Madoff assistant Annette Bongiorno on Monday testified that she had no idea her boss was operating a vast Ponzi scheme, despite the decades she spent helping run the trading business where it originated.
Bongiorno said she recorded backdated trades, sometimes months after the fact, but never suspected there was anything illegal about it.
"Did anyone ever suggest to you that there was something wrong with that practice?" her lawyer, Roland Riopelle, asked her.
"The only person who ever suggested that to me was you," she replied.
Bongiorno is on trial in Manhattan federal court along with four other Madoff employees, all accused of aiding the fraud.
She became the second defendant to testify in her own defense, after Madoff's director of operations, Daniel Bonventre, chose to do the same last week. His testimony concluded on Monday morning.
The other defendants - portfolio manager Joann Crupi and computer programmers Jerome O'Hara and George Perez - have indicated they will not testify. All five have denied knowing about the scheme, saying they were fooled by the charismatic Madoff into believing the trading business was legitimate.
Madoff is serving a 150-year prison sentence after pleading guilty. The criminal case is the first to reach trial since the firm collapsed in 2008, revealing a fraud that cost investors an estimated $17 billion in principal losses.
Prosecutors have accused Bongiorno of arranging for fake trades to be recorded in customer accounts using historical stock prices, concealing the fact that no trading was taking place at all in the firm's investment advisory business.
But Bongiorno flatly denied she had any inkling that Madoff - whose photo she kept on her desk with the notation "my hero" scribbled across it - was doing anything illegal.
In approximately an hour of testimony, Bongiorno portrayed herself as an inexperienced 19-year-old who knew nothing about the securities industry when she arrived at Bernard L. Madoff Investment Securities in 1968, seeking a career as a secretary. The firm had fewer than 10 employees at the time.
She met Madoff on her first day, when she took his lunch order. In those days, she said, he suffered from a stutter and had trouble explaining that he wanted a ham and cheese sandwich.
With a brother who also stuttered, she said, she understood what he wanted and brought him the sandwich.
"He said, 'You're going to do really good here,'" and gave her a thumbs up, she said.
Like Bonventre before her, Bongiorno said Madoff was exceptionally generous with his employees, paying for her honeymoon as a wedding gift. When her mother had a debilitating stroke, Madoff secured her a spot in a nursing home where she had been turned down, she testified, her voice cracking.
"He said, in typical Bernard Madoff fashion, 'I made them an offer they couldn't refuse,'" she recalled.
When she learned of the fraud upon Madoff's arrest in December 2008, she said, she told a colleague to throw the "hero" photo of Madoff away.
The decision to testify in her own defense is unusual for a criminal defendant and represents a calculated risk, offering the jury an explanation but subjecting her to what will likely be intense questioning from the government about how she could have been so completely in the dark.
Prosecutors have not yet had a chance to question Bongiorno, who will resume testifying on Tuesday. The trial, now in its fifth month, is expected to conclude within two weeks.
The case is USA v. O'Hara et al, U.S. District Court, Southern District of New York, No. 10-cr-0228.