U.S. prosecutors on Monday dropped their bid to extend the prison terms for five of Bernard Madoff's ex-employees, who received lighter sentences after being convicted of aiding his $17.5 billion fraud.
The sentences for the group, composed of Madoff's top aides, ranged from 2½ years to 10 years, less than half the time sought by the U.S. In a notice filed in federal appeals court in New York, the government didn't explain why it was abandoning its effort. The U.S. attorney's office in Manhattan declined to comment.
When U.S. District Judge Laura Taylor Swain handed down the sentences in December, prosecutors warned that the prison terms could hinder justice for victims of the biggest Ponzi scheme in U.S. history and could set a bad precedent for future white-collar prosecutions.
A jury in March 2014 found Madoff's five former colleagues guilty on all charges. Swain, who oversaw the five-month trial, cited the fundamental responsibility of Madoff, rather than his aides, as a key reason for the shorter prison terms, saying he manipulated loyal employees who lacked proper financial training.
Daniel Bonventre, Madoff's ex-operations chief, was sentenced to 10 years in prison; Annette Bongiorno, who ran the investment advisory unit at the center of the fraud, and Joann Crupi, who managed investment advisory accounts, each got six-year terms. Computer programmers Jerome O'Hara and George Perez, who automated the scam as it grew rapidly in the 1990s, got 2½ years each.
All five former aides appealed their convictions, standing by their claims of innocence.
"The government's action is the appropriate one and we look forward to the hearing of Ms. Crupi's appeal," her lawyer, Eric Breslin, said in an email.
Roland Riopelle, Bongiorno's lawyer, said his client's sentence wasn't lenient but was based on "very careful consideration" by Swain.
"While the sentence was severe, it was tempered by a sense of mercy, and it reflected my client's fundamental decency as a human being," Riopelle said.
Madoff's New York-based investment-advisory firm spent customer cash on operations and to pay fake profits to investors instead of buying securities. The five defendants used millions of fake trade confirmations and bogus account statements to dupe customers for decades.
The fraud collapsed after Madoff's arrest on Dec. 11, 2008. He was sentenced to 150 years in prison after a guilty plea.
The case is U.S. v. O'Hara, 10-cr-00228, U.S. District Court, Southern District of New York (Manhattan).
Business on 11/24/2015