Five former aides to Bernard Madoff who prosecutors said have shown a "galling" lack of remorse since being convicted of fraud were to be sentenced next week for propelling the biggest Ponzi scheme in U.S. history.
The three men and two women, who worked for Madoff for decades, deserve "significantly harsher" terms than the eight to 20 years recommended by the U.S. Probation Office, the government said in court filings this month. The defendants seek leniency, arguing jurors were misled by overzealous prosecutors.
U.S. District Judge Laura Taylor Swain, who oversaw the five-month trial in Manhattan, was scheduled to hand down sentences in separate hearings over three days beginning Monday. Swain, who rejected requests to set aside the March verdicts, this week postponed sentencing to the week of Sept. 15, citing "voluminous" paperwork.
"The devastation caused by these defendants and their co-conspirators is sweeping and, in many ways, unfixable," Assistant U.S. Attorney Matthew Schwartz said in a July 18 memo. "That makes the defendants' lack of contrition all the more galling."
A federal jury on March 24 found the five guilty of securities fraud and related counts, handing the government a total victory in the first criminal trial over Madoff's $17.5 billion fraud.
Madoff, 76, pleaded guilty in 2009 and is serving a 150-year sentence in a federal prison in North Carolina. Madoff didn't cooperate in the government's investigation. At least seven others pleaded guilty, including his brother Peter Madoff, who is serving a 10-year prison term.
"The prosecutors are trying to make the point that those who participate in fraud will be punished severely," said Stuart Slotnick, a white-collar criminal defense lawyer with Buchanan Ingersoll & Rooney PC in New York, who isn't involved in the case. "Having won, the prosecutors are completely invested in the outcome, which is the prison sentence."
The five former employees worked in concert to create millions of fake trade confirmations and account statements for thousands of clients and fashioned an extensive, phony paper trail that repeatedly duped outside auditors and the U.S. Securities and Exchange Commission, the jury found.
Annette Bongiorno, who ran the investment advisory unit at the center of the fraud, and Daniel Bonventre, the ex-operations chief of Madoff's broker-dealer business, deserve 20 years each behind bars, the probation office said. Joann Crupi, who managed large accounts, should get 14 years, while computer programmers George Perez and Jerome O'Hara, convicted of automating the scam as it grew rapidly in the 1990s, deserve eight years each, according to probation officials.
Defense lawyers have continued to deny in pre-sentencing court filings that their clients were aware of the "epic" fraud, the U.S. said. The tactic "flies in the face" of the jury's verdict and justifies longer sentences, the government said.
"Prosecutors are particularly offended when a criminal defendant takes the stand in their own defense and lies," Slotnick said.
Prosecutors also argue stiff prison terms are warranted for Bongiorno and Bonventre because they lied when they testified in their own defense. They were the only defendants who took the stand. Jurors interviewed after the trial said the testimony was a mistake.
The group had faced prison terms ranging from 58 years to about 200 years based on the charges on which they were found guilty. The defendants are free on bail and were ordered by Swain after the trial to wear electronic monitors.
Defense lawyers already have said they will seek to overturn the convictions on appeal.
Business on 07/26/2014