Former Bernard Madoff controller testifies how records were altered
Disgraced financier Bernard Madoff leaves federal court in Manhattan in 2009 after agreeing to plead guilty to charges in a massive Ponzi scheme. He is now serving 150 years in a federal prison in North Carolina. Credit: AFP / Getty Images
A former controller for Bernard Madoff testified that her ex-colleagues helped take investor money to inflate profits in the rest of his business and altered records to hide the thefts at the federal court trial of five Madoff aides Tuesday.
Enrica Cotellessa-Pitz, the third cooperating witness to testify at the trial, repeatedly fingered her ex-boss, former director of operations Daniel Bonventre, recalling how he once oversaw creation of a mock report from the Depository Trust Co. to fool auditors.
She said he kept different versions in his office, as aides tried to get details down to the right style of asterisks and the same "green and white paper" to look like a genuine report of the DTC, which keeps stock ownership and transfer records.
"There were different kinds of paper, different fonts that we used in the creation of the document, different formats, different layouts until it looked real," Cotellessa-Pitz testified.
Bonventre, 66, of Manhattan; former account managers Annette Bongiorno, 65, of Manhasset, and Joanne Crupi, 52, of Westfield, N.J.; and computer programmers Jerome O'Hara, 50, of Malverne, and George Perez, 47, of East Brunswick, N.J., are charged with helping Madoff pull off his $60 billion Ponzi scheme.
The defendants all claim they were duped by Madoff and didn't know he was scamming investors. Madoff is in prison in North Carolina. The trial, in its second month in federal court in Manhattan, may last as long as five months.
Cotellessa-Pitz, who pleaded guilty to securities fraud in 2011, joined the firm straight out of college in 1978, and had no other experience in the securities business. She said that she invested with Madoff, and lost an account valued at $3.6 million when the firm collapsed in 2008.
In addition to using new money from investors to fund redemptions, Cotellessa-Pitz testified, Madoff had herself and Bonventre manipulate the company's books to save him money on his income taxes and to channel investor money into his legitimate market-making and proprietary trading businesses.
Sometimes transfers were disguised as "interest," she testified, sometimes as "commissions" and other times the money was used to pay down loans.
"We were putting it into securities positions to hide money, basically to inflate the firm's profit," she testified.
She also recalled one awkward closed-door meeting she attended with Bonventre and another aide in which Madoff discussed laundering investor money back into the company through an overseas office. "You all know what we do here," Madoff said.
"I was not really sure what we do here," Cotellessa-Pitz said. "I was in this position I was embarrassed to not know what my boss was referring to. There was silence in the room."