2 former Madoff staffers arrested in Ponzi scheme

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. The government says Bongiorno also has a home in Manhasset.

An indictment unsealed in federal court in Manhattan alleges Crupi, 49, and 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 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.

Crupi was charged with creating false records to cover Madoff's tracks during 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 cash on hand, which by late 2008 was woefully insufficient to meet those requests," the indictment said.

Reuters reported that Crupi, and Bongiorno were among those considered part of the inner circle at Madoff's investment advisory firm. Crupi worked for Madoff for 25 years, Bongiorno for 40.

Seized records show that 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. 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.

Crupi was due in Manhattan court Thursday, while Bongiorno will have an initial appearance in Florida. Both are charged with conspiracy, securities fraud and falsifying records.

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 and Boca Raton, Fla., and other assets to Bongiorno.

Maurice H. Sercarz, a Manhattan attorney representing Bongiorno, told Newsday, "Now that the Government has formally charged my client, we look forward to demonstrating that Annette is not guilty of these allegations."

Bloomberg News reported that prosecutors have been seeking to seize more than $2 million in cash and the New York and Florida homes from Bongiorno and her husband, Rudy, a former electrician with the New York City Department of Transportation. The couple is fighting the seizure attempt.

An attorney who represented Crupi previously did not immediately respond to phone and e-mail requests Thursday for comment.

Madoff is serving a 150-year sentence in federal prison after admitting that he operated his fraud for at least two decades, cheating thousands of individuals, charities, celebrities and institutional investors. Losses are estimated at around $20 billion, making it the biggest investment fraud in U.S. history.

Both Crupi and Bongiorno face up to 20 years in prison if convicted of the most serious charges.