5 Madoff ex-employees face new charges
Five of Bernard Madoff's ex-employees will face trial a year from now on new charges stemming from his $17.5 billion Ponzi scheme.
All five defendants, who had previously been charged in the case, including Annette Bongiorno of Manhasset, pleaded not guilty Tuesday to a superseding indictment in federal court in Manhattan.
Judge Laura Taylor Swain set Oct. 17, 2013, as a trial date. Bongiorno was a supervisor in Madoff's bogus trading operation and oversaw accounts of some high-worth clients with purported value of $8.5 billion, according to the beefed-up indictment.
The new indictment unsealed Monday alleged that Madoff's scheme started as far back as the early 1970s and perhaps earlier. When Madoff pleaded guilty in March 2009, he said his fraud began in the early 1990s, a claim that a number of investigators at the time said they didn't believe.
In the nearly four years since Madoff was arrested, federal investigators with the FBI believed they have uncovered evidence from the millions of documents in the case to push the beginning of the fraud back at least two decades.
Earlier this year, however, Irving Picard, the bankruptcy trustee in charge of recovering clients' funds, said in court filings that he believed from his investigation that Madoff didn't make any trades for clients as far back as the 1970s. Madoff is serving a 150-year federal prison sentence.
Along with pushing up the start of Madoff's crimes further, the new indictment describes how he employed a second investment strategy to bilk investors. In addition to his previously known "split strike conversion" plan, Madoff used an "arbitrage strategy" which also involved fake trades, the indictment alleged.
"These arbitrage trades were a fiction and were 'executed' only on paper," the new indictment charged. Arbitrage refers to stock trading practices that try to exploit pricing differences in the market, the indictment stated.
Although the indictment doesn't spell out the source of new information for the charges, it suggests that some former Madoff employees who have pleaded guilty to charges, such as Frank DiPascali, provided critical information.
Maurice Sercarz, defense attorney for Bongiorno, said the new indictment didn't make any significant changes in the case against his client.
"We still look forward to going to trial," Sercarz said.
This story was supplemented with reports from Reuters.