Prosecutors, defense spar over $150 billion forfeiture for Madoff aides

Tue Jul 29, 2014 5:50pm EDT
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By Joseph Ax

NEW YORK (Reuters) - Four months after five former Bernard Madoff aides were convicted of helping conceal his massive Ponzi scheme, their lawyers and U.S. prosecutors are still fighting over the trial's key question: What did they know, and when did they know it?

Prosecutors are seeking more than $150 billion in criminal forfeiture from the longtime employees of Bernard L. Madoff Investment Securities: back-office director Daniel Bonventre, portfolio managers Annette Bongiorno and Joann Crupi and computer programmers Jerome O'Hara and George Perez.

At a court hearing on Tuesday in New York federal court, the government argued the defendants are responsible for every dollar of investor money that came to the firm after they started working there, because they should have known the money could be lost as a result of the scheme.

But lawyers for the five aides said the government had failed to pinpoint a specific moment when each defendant became aware the firm was propped up by fraud. They noted that even Madoff's top lieutenant, Frank DiPascali, did not know the extent of the scheme until a week before the firm's collapse.

"Based upon one or two cherry-picked pieces of evidence, Your Honor is being asked to decide when these defendants knew to a certainty" that a fraud was occurring, said Eric Breslin, a lawyer for Crupi.

The defendants were found guilty in March of all counts, following one of the longest white-collar trials in New York federal court history. [ID:nL1N0ML1EC]

Madoff is serving a 150-year prison sentence after pleading guilty in 2009 to the fraud, estimated to have cost investors more than $17 billion in principal.

U.S. District Judge Laura Taylor Swain said on Tuesday she would give prosecutors another chance to marshal evidence that shows the defendants were aware of the scheme from the outset of their employment.   Continued...

Bernard Madoff exits the Manhattan federal court house in New York in this January 14, 2009 file photo.   REUTERS/Brendan McDermid/Files