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From Securities Regulation Daily, March 24, 2014

Guilty verdict in Madoff case

By Mark S. Nelson, J.D.

A federal jury in Manhattan today convicted five key figures in the Madoff Ponzi scheme. The jury unanimously found Daniel Bonventre, Annette Bongiorno, Jo Ann Crupi, Jerome O’Hara, and George Perez guilty of all 31 counts charged (U.S. v. O’Hara, et al., March 24, 2014).

Manhattan U.S. Attorney Preet Bharara emphasized in a statement that Bernard Madoff, the alleged leader of the Ponzi scheme who is now serving a prison term, did not act alone. “These convictions, along with the prior guilty pleas of nine other defendants, demonstrate what we have believed from the earliest stages of the investigation: this largest-ever Ponzi scheme could not have been the work of one person.”

Court filings, including the superseding indictment, and a press release issued by the Manhattan U.S. Attorney’s Office, described the use of multiple computer systems known to Madoff employees as House 05 and House 17 to track and generate trading records. Some of these computer servers did not interact with third parties. At one point during deliberations, the jury expressed confusion over which business entities used the computer systems. In a note, the jury asked the judge to clarify if some counts “only pertain” to House 05 or House 17.

The court had instructed the jury on five conspiracy counts, including conspiracy to commit securities fraud, to falsify broker-dealer records, and to falsify investment adviser records. The court also instructed the jury on numerous substantive counts.

According to Bharara, the trial demonstrated the degree of help that Madoff received in running the Ponzi scheme, beginning in the early 1970s. “These defendants each played an important role in carrying out the charade, propping it up, and concealing it from regulators, auditors, taxing authorities, lenders, and investors,” said Bharara.

As for the impact on Madoff’s victims, Bharara said, “The scheme these defendants helped perpetrate cost innumerable investors their life savings. Now it likely will cost the defendants their freedom.”

The case is No. 1:10-cr-00228-LTS.

Companies: Bernard L. Madoff Investment Securities LLC; Bernard L. Madoff Investment Securities

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