Madoff Aide Allegedly Got Fake 'Tickets' of Trading

* MARCH 9, 2009

Madoff Aide Allegedly Got Fake 'Tickets' of Trading



By AMIR EFRATI

A longtime aide to disgraced financier Bernard Madoff instructed two assistants to generate trading tickets, now believed to be bogus, for Mr. Madoff's investing clients, according to information the assistants gave the government in the investigation.

The assistants told prosecutors that their supervisor, Annette Bongiorno, a four-decade veteran of the Madoff firm, would ask them to research daily share prices for blue-chip stocks from the previous month or several months, according to a person familiar with their statements.
[Bernard Madoff]

Bernard Madoff

Using the data of past share prices, Ms. Bongiorno would then instruct the assistants to generate "tickets" showing purported trades, which resulted in gains that were in line with Mr. Madoff's steady annual returns, this person said. Ms. Bongiorno couldn't be reached for comment.

The development comes as Mr. Madoff signaled last week that he will plead guilty to numerous crimes during a scheduled hearing in federal court on Thursday, people familiar with the case say. Mr. Madoff's attorney, Ira Sorkin, declined to comment.

The charges against Mr. Madoff are expected to include securities fraud, wire fraud, mail fraud and money laundering, according to one person familiar with the case. Mr. Madoff waived a grand-jury indictment and prosecutors will instead file a document called a criminal information to charge him.

The document is expected to be detailed and will lay out the story of how the alleged fraud was committed. It will shine a light on the alleged fraud back to the 1980s, though it actually may have started earlier, according to the person familiar with the case.

If Thursday's hearing goes as planned, prosecutors will be able to devote more time to other people who might have been involved in the alleged fraud. Though Mr. Madoff has told prosecutors he acted alone, his account is doubted by investigators, given the scope and the duration of the alleged fraud, according to several people familiar with the matter.

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A look inside the Bernard L. Madoff Investment Securities offices in the Lipstick Building in Manhattan.

The two assistants to Ms. Bongiorno, Semone Anderson and Winnie Jackson, did clerical work and helped generate stock-trade confirmations for client accounts, which purported to show gains that were later applied to client accounts. The confirmations are now believed to have been fictitious, according to a court-appointed trustee who is liquidating the Madoff firm. Ms. Bongiorno, 60 years old, was once Mr. Madoff's personal secretary and later oversaw some of the firm's oldest accounts.

The two assistants were interviewed by the U.S. attorney's office for the Southern District of New York through what are called proffer agreements, in which prosecutors agree not to use their statements against them as long as they tell the truth, according to people familiar with the matter.

Prosecutors also have begun interviewing employees from a group that was separate from Ms. Bongiorno and oversaw accounts for many of Mr. Madoff's institutional accounts. That group was headed by Frank DiPascali Jr., 52, who hasn't yet been asked to speak with prosecutors, according to a person familiar with the matter. Mr. DiPascali's lawyer declined to comment on his client's behalf.

Mr. DiPascali referred to himself as the "director of options trading" at the firm and Mr. Madoff told investors he executed trades, despite the fact that a court-appointed trustee found that no trading occurred for at least the past 13 years. Prosecutors have asked at least three employees who worked under Mr. DiPascali about his role in the firm, according to a person familiar with the matter. The employees, Eric Lipkin, JoAnn Crupi and Robert Cardile, who is Mr. DiPascali's brother-in-law, also had proffer agreements with prosecutors.

Prosecutors' approach so far has been typical of other large fraud investigations: begin with lower-level employees to find out what they knew about the work of their supervisor or other managers, then continue to climb up the ladder. Much of the alleged fraud is believed to have occurred on the 17th floor of the Manhattan high-rise where Mr. Madoff kept his offices. Many of the employees on that floor had little or no financial expertise and started working there at a very young age, according to several people familiar with the firm.

Prosecutors' strategy to start with lower-level employees is one explanation why higher-level employees and other Madoff relatives have yet to be interviewed by prosecutors. Authorities haven't interviewed Mr. Madoff's sons, Andrew or Mark Madoff since Dec. 11 after the two brought them information on Dec. 10 their father confessed to the scheme, touching off the current investigation. The sons helped run the market-making side of the Madoff firm, which was separate from its fraudulent investment operation.

The lawyer for Mark and Andrew Madoff said in a statement that the two "had no knowledge whatsoever of the fraud before their father informed them ... and they immediately reported the fraud to the U.S. Department of Justice and the SEC."

It isn't known whether prosecutors have spoken to Mr. Madoff's brother, Peter, who was the firm's chief compliance officer or to Bernard Madoff's wife, Ruth, who is being looked at by prosecutors because she once had a role in overseeing the Madoff firm's bank accounts, according to a person familiar with the matter. A lawyer for Peter Madoff didn't return calls for comment. The lawyer has said in recent months that his client didn't know about the fraud. Mr. Sorkin, who represents Ruth Madoff, had no comment.

To be sure, such fact-gathering doesn't mean that prosecutors will determine there was any criminal liability. No employees of the Madoff firm have been accused of wrongdoing, save for Mr. Madoff.