NEW YORK, July 29 Four months after five former Bernard Madoff aides were convicted of helping conceal his massive Ponzi scheme, their lawyers and U.S. prosecutors are still fighting over the trial's key question: What did they know, and when did they know it?
Prosecutors are seeking more than $150 billion in criminal forfeiture from the longtime employees of Bernard L. Madoff Investment Securities: back-office director Daniel Bonventre, portfolio managers Annette Bongiorno and Joann Crupi and computer programmers Jerome O'Hara and George Perez.
At a court hearing on Tuesday in New York federal court, the government argued the defendants are responsible for every dollar of investor money that came to the firm after they started working there, because they should have known the money could be lost as a result of the scheme.
But lawyers for the five aides said the government had failed to pinpoint a specific moment when each defendant became aware the firm was propped up by fraud. They noted that even Madoff's top lieutenant, Frank DiPascali, did not know the extent of the scheme until a week before the firm's collapse.
"Based upon one or two cherry-picked pieces of evidence, Your Honor is being asked to decide when these defendants knew to a certainty" that a fraud was occurring, said Eric Breslin, a lawyer for Crupi.
The defendants were found guilty in March of all counts, following one of the longest white-collar trials in New York federal court history.
Madoff is serving a 150-year prison sentence after pleading guilty in 2009 to the fraud, estimated to have cost investors more than $17 billion in principal.
U.S. District Judge Laura Taylor Swain said on Tuesday she would give prosecutors another chance to marshal evidence that shows the defendants were aware of the scheme from the outset of their employment.
With additional briefs on that issue now expected through August and September, the five aides will likely have their sentencing dates pushed back for the third time. They are currently scheduled for the last week of September.
Swain also said she would entertain a request for hearings to determine when each employee knew of the fraud, raising the possibility of a series of mini-trials complete with witnesses and evidence.
The size of the forfeiture could eventually affect whether relatives of the defendants can keep certain assets stemming from their employment at the firm.
Prosecutors have asked for prison terms of more than 20 years for Bonventre and Bongiorno, more than 14 years for Crupi and more than eight years for O'Hara and Perez.
The case is U.S. v. O'Hara et al, U.S. District Court, Southern District of New York, No. 10-cr-00228. (Reporting by Joseph Ax; editing by Gunna Dickson)