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Monday, April 15, 2024 | Back issues
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Ex-Madoff Operations Chief Arrested on Fraud

MANHATTAN (CN) - Bernard Madoff's former director of operations was arrested today on charges of conspiracy, securities fraud and tax fraud. Daniel Bonventre, 63, also faces an SEC lawsuit accusing him of cooking the books, allowing Madoff to bilk investors for $65 billion in the largest Ponzi scheme in history.

The SEC claims Bonventre "falsified accounting records" to hide the fact that Bernard L. Madoff Investment Securities was a multibillion-dollar house of cards.

Madoff's company "used hundreds of millions of dollars of investor funds to artificially improve BMIS' reported revenues and net income, and to line the pockets of Madoff, his family, and employees," the SEC claims.

Bonventre personally made "at least $1.9 million" from "fake, backdated 'trades' in Bonventre's own investor account at BMIS," the lawsuit states.

He also made an annual salary of more than $900,000 from 2005 through 2008, the SEC says.

It claims Bonventre helped Madoff and former CFO Frank DiPascali cover up the scam when investigators came knocking, through false reports and "persuasive lies."

"A fraud of this magnitude requires a coordinated effort," said George Canellos, director of the SEC's New York office. "Bonventre played an essential part by creating bogus financial records to give BMIS the appearance of legitimacy, when in fact the firm lost money and could not have survived without the fraud."

If convicted of the criminal charges, Bonventre faces up to 77 years in prison.

DiPascali pleaded guilty to 10 felony counts, including conspiracy and tax evasion, for his role in the scam. He is awaiting sentencing.

Madoff, the scheme's orchestrator, was sentenced to 150 years in prison last June after pleading guilty to 11 felony counts, including securities fraud, money laundering and perjury.

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