- Associated Press - Thursday, November 18, 2010

NEW YORK (AP) — Two longtime back office employees of Bernard Madoff were arrested Thursday on charges that they helped the disgraced financier dupe investors for decades by making fictitious investments — and that they cashed in on the epic Ponzi scheme themselves.

FBI agents arrested Joann Crupi at her house in Westfield, N.J., while Annette Bongiorno was picked up at her home in Boca Raton, Fla.

An indictment unsealed in federal court in Manhattan alleges Ms. Crupi, 49, and Ms. Bongiorno, 62, “‘executed’ trades in the accounts of [wealthy clients] only on paper … and that achieved annual rates of return that had been predetermined by Madoff.”

Prosecutors, citing internal communications, say Ms. Bongiorno used a computer program designed to backdate trades and manipulate account statements.


“I need the ability to give any settlement date I want,” she wrote to a manager in the early 1990s, according to the indictment.

FILE - In this March 10, 2009 file photo, Bernard Madoff exits Manhattan federal court in New York. U.S. District Judge Denny Chin said Monday, June 29, 2009, that the federal probation department recommends that Madoff get 50 years in prison. (AP Photo/David Karp, File)
FILE - In this March 10, 2009 file photo, Bernard Madoff exits ... more >

Ms. Crupi was charged with creating false records to cover Madoff’s tracks amid reviews by the Securities and Exchange Commission. Prosecutors say that as the scheme unraveled, she “became aware that client redemption requests bore no relationship to [the business’] cash on hand, which by late 2008 was woefully insufficient to meet those requests,” the indictment said.

Seized records show that Ms. Bongiorno deposited about $920,000 in her own Madoff account from 1975 to 2008 and withdrew more than $14 million over the same period, the indictment said. Ms. Crupi received hundreds of thousands of dollars in “off the books” income, it added.

The women “protected and perpetuated the Madoff mirage while putting very real money in their own pockets,” U.S. Attorney Preet Bharara said in a statement.

Both are charged with conspiracy, securities fraud and falsifying records.

Ms. Crupi was due in Manhattan court Thursday. Her attorney did not immediately respond to comment requests.

Ms. Bongiorno appeared in court in West Palm Beach, Fla. A bail hearing was scheduled for Monday, meaning Ms. Bongiorno will spend at least the weekend in jail.

She was asked by U.S. Magistrate Judge Ann Vitunac if she understood the charges.

“I understand most of it,” she replied. “I don’t understand all of it.”

Authorities filed civil papers in June seeking to recoup $5 million from the two employees. The government said in August that it had traced houses in Manhasset, N.Y., and Boca Raton, Fla., and other assets to Ms. Bongiorno.

Ms. Bongiorno’s attorney, Nina Mandel, asked if property that had government liens on it could be used toward the bond requirement. Judge Vitunac said it could not, leading Ms. Mandel to note that Madoff had been allowed to use such property to post bond.

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