A CHILL ACROSS THE PONZI LANDSCAPE: Two Women Arrested, Charged With Helping Bernard Madoff Pull Off Epic Ponzi Scheme; ‘House Of Cards Is Almost Never Built By One Lone Architect,’ U.S. Attorney Says

Madoff

BULLETIN: The FBI has arrested Joann Crupi of Westfield, N.J., and Annette Bongiorno of  Boca Raton, Fla.

The women were charged with helping Bernard Madoff pull off his Ponzi scheme by both actively participating in and concealing the epic fraud, federal prosecutors in New York said. The women had worked for Madoff for a combined total of 65 years and routinely “executed” client trades “only on paper, based on historically reported prices of securities that they researched in the Wall Street Journal and Bloomberg.”

“Those trades achieved annual rates of return that had been pre-determined by Madoff,” prosecutors charged.

The scheme was so foundationally corrupt that Bongiorno “processed exceptional gains in the IA [investment-advisory] accounts that occurred months before the IA accounts even had been established,” prosecutors said.

Meanwhile, she “also asked IA clients to return previously-issued BLMIS [Bernard L. Madoff Investment Securities] account statements so that she could alter them, and often include additional backdated trades. She received specific instructions from IA Clients about the amount of appreciations and gains they wanted to be reflected in their IA accounts,” prosecutors said.

At the same time, Crupi “prepared and assisted in the preparation of fabricated documents designed to deceive regulators and outside auditors,” prosecutors said. “Among other things, by keeping track of BLMIS’s daily cash balance, Crupi became aware that client redemption requests bore no relationship to [BLMIS’s] cash on hand, which by late 2008 was woefully insufficient to meet those requests.”

Now, Bongiorno, 62, faces a maximum prison sentence of 75 years if convicted on all counts. Crupi, 49, potentially faces 65 years behind bars.

“As everyone knows, Bernard Madoff perpetrated the largest financial fraud in history, but as we allege again today, others criminally assisted his epic crime,” said U.S. Attorney Preet Bharara of the Southern District of New York.

In a comment that could send chills across the spines of Ponzi concealers and apologists across the United States, Bharara added that “A house of cards is almost never built by one lone architect.”

Crupi and Bongiorno were charged with a series of felonies.

Among the charges were conspiracy, securities fraud, falsifying books and records of a broker-dealer, falsifying books and records of an investment adviser, and tax evasion.

“Bongiorno and Crupi were both long-time Madoff employees who played vital roles in the scheme and its concealment,” said Janice K. Fedarcyk, FBI assistant-director-in-charge. “We knew early on that a fraud of this scale could not have been the work of one person alone.”

Both defendants “personally benefited” from the fraud, prosecutors charged.

Bongiorno stacked the deck in her own favor by creating “numerous backdated trades in her own IA accounts,” prosecutors said.

“From 1975 to 2008, [she] deposited only approximately $920,000 into her own IA accounts; however, she withdrew more than $14 million during that same time period,” prosecutor said, adding that Bongiorno also received “more than $325,000 in off the books income” from the scheme — on top of her salary.

Crupi “received payments of more than $2.7 million from Madoff directly out of the [BLMIS] bank account that held investor funds,” plus more than $270,000 in off-the-books income,” prosecutors charged.