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Madoff staff trial expected to detail $17B swindle

Bernard Madoff, who is now serving out the

Bernard Madoff, who is now serving out the rest of his life in a federal prison, stands on his company's trading floor in 1999, just less than 10 years before he owned up to the $17 billion Ponzi scam. Five of his staff members are facing trial in October 2013 in connection with the swindle. Photo Credit: AP

The trial of five former employees of Bernard Madoff, including his longtime personal secretary and two computer programmers, will become a full-time job for about five months for jurors. However, the trial is expected to give insights into how Madoff operated his $17 billion swindle.

U.S. District Judge Laura Taylor Swain in Manhattan Tuesday began asking a group of about 300 New Yorkers detailed questions about their backgrounds and ability to be objective. Twelve jurors, along with six alternates, will be chosen to decide the fate of Madoff's inner circle, charged with helping carry out the biggest Ponzi scheme in U.S. history.

The length of the trial could pose a problem for the defense in particular, since some jurors may be inclined to rush the process so they can return to work, said Tamar Frankel, a professor at the Boston University School of Law.

"Five months is difficult -- it's a long time," Frankel said in a phone interview. "From time to time you always have somebody who wants to get it over with, who says it's an open and shut case. There's always someone who says 'to hell with it.' But if they continue, they find out something different. This is a complex case."

The jury selection process could take all week, and opening arguments may not start until Oct. 15, said Stephanie Cirkovich, a public information officer for the court. "Not everybody who has a job can afford this," Frankel said. "That also creates pressure on the people to get it over with as quickly as possible."

Five defendants

The former employees, all of whom have pleaded not guilty, are Annette Bongiorno, Madoff's personal secretary who worked with him for 40 years and helped recruit investors; Joann Crupi, a back-office worker who managed large accounts; ex-operations chief Daniel Bonventre and computer programmers Jerome O'Hara and George Perez.

Swain asked the group of potential jurors if they personally knew or had connections to dozens of people involved in the case, including former Madoff investor and hedge-fund manager J. Ezra Merkin and celebrity victims such as talk-show host Larry King and 96-year-old actress Zsa Zsa Gabor.

Swain also asked the people one at a time to describe their families and backgrounds, and whether they had invested in or worked in the securities industry.

"Don't try to give politically correct answers or answers you think are good for an ideal juror," Swain told the group, which included a grandmother, a high-school dropout and a trade negotiator at Royal Bank of Canada in Manhattan.

The defendants, who took turns standing and facing the group of potential jurors, face 33 counts including securities fraud, mail fraud, bank fraud, falsifying records and submitting false information to regulators. Some of the defendants also face tax-fraud claims.

Madoff video

In a court filing Tuesday, Assistant U.S. Attorney Matthew Schwartz, who is leading the prosecution, asked Swain to deny a request by Crupi to play a video for the jury during the defense's opening statement showing Madoff speaking about his business at a roundtable forum in October 2007. The prosecutors say the video is hearsay and irrelevant.

Portions of Tuesday's proceedings were conducted in the judge's robing room and were attended by a pool reporter.

Defense lawyers argued during that session that potential jurors should be rejected if they knew anyone who was affected by the fraud.

Prosecutors said that was too broad because the fraud affected thousands of people.

Country club

One potential juror said he works as a locker room attendant at Old Oaks Country Club in Westchester County where he knew of about 30 people who lost money in Madoff's fraud. Madoff's former accountant, Paul Konigsberg, belongs to the club and has golfed three times since he was arrested, the prospective juror said.

Konigsberg, arrested Sept. 26, was charged in relation to the fraud, and released on $2 million bail.

The trial is expected to offer the fullest public accounting yet of how Madoff carried out the fraud, which cost thousands of investors $17 billion in lost principal and billions more in imaginary profit. Earlier guilty pleas by Madoff, 75, and some of his top aides averted a trial until now.

150-year term

Madoff was arrested Dec. 11, 2008, after telling federal agents that his company was a sham. Four months later, he pleaded guilty to 11 charges including securities fraud and wire fraud and was sentenced to 150 years in prison. While he confessed to swindling his clients, he refused to admit to a conspiracy charge that would have required him to implicate others, people familiar with the case said at the time.

In August 2009, federal prosecutors won a guilty plea from Frank DiPascali, Madoff's finance chief, who agreed to cooperate with prosecutors and explain how he and others helped Madoff defraud investors. David Friehling, an accountant for Madoff, also pleaded guilty to helping him prepare phony tax returns and is cooperating with prosecutors.


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