FBI Arrests 2 Women in Connection With Madoff Case - NBC New York

FBI Arrests 2 Women in Connection With Madoff Case

Charges against former employees include securities fraud and tax crimes



    FBI Arrests 2 Women in Connection With Madoff Case
    WTVJ/Getty Images
    Annette Bongiorno, Bernie Madoff

    Federal agents nabbed two more Bernie Madoff employees in connection with the ongoing investigation into the disgraced financier's massive Ponzi scheme.

    Joann Crupi was arrested by the FBI this morning at her home in Westfield, New Jersey and Annette Bongiorno, Madoff's secretary, was arrested at her home in Florida.

    Both women worked for Bernard L. Madoff Investment Securities LLC for more than 25 years.

    Charges against the former employees include securities fraud and tax crimes.

    FBI spokesman Rich Kolko confirmed the arrests first reported by NBCNewYork.com. 

    In June, the U.S. Attorney Office filed civil lawsuits demanding Crupi and Bongioro hand over millions in assets, including a Bentley and a $2.25 million house in New Jersey. The lawsuits alleged the ex-employees "knowingly participated in the fraud."   Both women worked with Madoff's right-hand man - Frank DiPascali.  DiPascali has pleaded guilty and is cooperating with the FBI and federal prosecutors.

    Bongiorno, who grew up in Howard Beach, has a $2.6 million mansion in Boca Raton.  Prosecutors have also said she bought herself a $160,000 Bentley and $90,000 Mercedes. 

    She allegedly knew the transactions reported in Madoff's documents were fake and that clients who asked for redemptions were paid with other clients' money, according to those lawsuits. Also in the civil complaints filed in June, prosecutors said Crupi managed client requests for redemptions and helped put together the fake documents designed to make regulators and outside auditors believe the fund was legitimate. 

    In all, U.S. Attorney Preet Bharara and other investigators are seeking to seize more than $5 million in assets from Bongiorno and Crupi.  "A house of cards is almost never built by a lone architecht," Bharara said.  "Year after year, Annette Bongiorno and Joann Crupi protected and perpetrated the Madoff mirage, while putting very real money in their own pockets."

    Meanwhile, other former employees facing charges include two computer programmers charged with helping cooking the books for Madoff.  Madoff himself is serving a 150-year prison term in North Carolina.  

    Former operations chief Daniel Bonventre, who ran the back office of Madoff's firm for more than 30 years, was also arrested earlier this year on securities and tax fraud charges.

    Prosecutors and the Securities and Exchange Commission have alleged Bonventre knew that the billions of dollars Madoff was collecting from investors were not being used to buy securities, and that he falsified records to hide the scheme.

    The SEC says Bonventre cashed in on the fraud by taking $1.9 million in profit from bogus backdated trades that had not occurred. A criminal complaint also accused him of failing to report hundreds of thousands of dollars in income to the IRS.

    The 63-year-old Bonventre is charged along with computer experts Jerome O'Hara and George Perez. The pair are accused of programming an old IBM computer to churn out account statements for unsuspecting clients that showed phony returns.

    Bonventre, O'Hara, 47, and Perez, 44, have pleaded not guilty.

    FBI New York Director Jan Fedarcyk said "the investigation continues" into others who helped Madoff.  Madoff, 72, is serving a 150-year prison sentence after admitting that he operated a Ponzi scheme for at least two decades. He admitted cheating thousands of individuals, charities, celebrities and institutional investors out of billions.

    As for the Securities and Exchange Commission, which came under scathing criticism for missing repeated tips and warning signs about Madoff's scheme, filed civil complaints against Bongiorno and Crupi.  Bongiorno allegedly created false books while Crupi is accused of misleading investors about Madoff and his scheme. 

    Crupi's defense attorney did not immediately return a call for comment. Bongiorno's lawyer claims she's innocent.

    "We look forward to finally having the opportunity to test these allegations in court.  We believe at the end of the day a jury will find that Annette is not guilty of any of the charges," said defense lawyer Maurice Sercarz.

    Magistrate Judge Frank Maas ordered Crupi released on $5 million bond, secured by $2 million in cash or property, with three co-signers and home detention via  electronic monitoring.

    Crupi could not immediately satisfy these conditions -- and prosecutor Lisa Baroni had asked for $7.5 million bond secured by $3 million in caIn cash or property, with five signers.

    Baroni argued that Crupi couldn't post her property because it consisted of illegal proceeds.

    Defense attorney Eric Breslin countered that  his client knew this charges were coming and if she wanted to flee would have "been gone frankly a long time ago."