MANHATTAN U.S. ATTORNEY CHARGES
TWO MORE FORMER BERNARD L. MADOFF INVESTMENT SECURITIES LLC EMPLOYEES WITH CONSPIRACY, SECURITIES FRAUD, AND TAX CRIMES
On November 18, 2010, ANNETTE BONGIORNO, an employee at Bernard L. Madoff Investment Securities, LLC ("BLMIS") for 40 years, and JOANN CRUPI, a/k/a "Jodi," an employee at BLMIS for 25 years, were arrested by federal agents. BONGIORNO and CRUPI are charged in a Superseding Indictment with conspiracy, securities fraud, falsifying books and records of a broker-dealer, falsifying books and records of an investment adviser, and committing tax evasion.
Manhattan U.S. Attorney Preet Bharara stated: "As everyone knows, Bernard Madoff perpetrated the largest financial fraud in history, but as we allege again today, others criminally assisted his epic crime. A house of cards is almost never built by one lone architect. As described in the superseding indictment, year after year, Annette Bongiorno and Joann Crupi protected and perpetuated the Madoff mirage, while putting very real money in their own pockets. . ."
According to the Indictment unsealed on November 18th in Manhattan federal court:
For decades, BERNARD L. MADOFF purported to provide investment advisory ("IA") services through BLMIS. In fact, MADOFF defrauded thousands of IA clients out of billions of dollars through an elaborate Ponzi scheme.
BONGIORNO and CRUPI, both employees in the IA business, are alleged to have knowingly participated in this fraud. BONGIORNO managed hundreds of IA accounts purportedly having a cumulative balance of approximately $8.5 billion dollars as of November 2008. BONGIORNO also supervised employees who worked for the IA business.
CRUPI managed several BLMIS IA accounts purportedly having a cumulative balance of approximately $900 million as of November 2008. She also tracked the daily activity of the bank account into which billions of dollars of IA clients' money for investment was deposited, and from which IA client redemptions were paid.
During the course of managing IA accounts which contained billions of dollars, BONGIORNO and CRUPI "executed" trades in the IA clients' accounts only on paper, based on historically reported prices of securities that they researched in the Wall Street Journal and Bloomberg. Those trades achieved annual rates of return that had been pre-determined by Madoff. BONGIORNO and CRUPI also backdated the purchase dates of purported trades so that they could control the amount of gains reflected in the IA accounts they managed. Further, BONGIORNO processed exceptional gains in the IA accounts that occurred months before the IA accounts even had been established. BONGIORNO also asked IA clients to return previously-issued BLMIS account statements so that she could alter them, and often include additional backdated trades. She received specific instructions from IA Clients about the amount of appreciations and gains they wanted to be reflected in their IA accounts.
CRUPI handled the receipt of funds sent to BLMIS by its clients for investment; transferred clients' funds between and among various BLMIS bank accounts; handled requests for redemptions sent to BLMIS by clients; monitored, on a daily basis, funds transferred into and out of the BLMIS bank account that principally was used to perpetrate the fraud; and prepared and assisted in the preparation of fabricated documents designed to deceive regulators and outside auditors. Among other things, by keeping track of BLMIS's daily cash balance, CRUPI became aware that client redemption requests bore no relationship to BLMIS's cash on hand, which by late 2008 was woefully insufficient to meet those requests.
Further, between 2004 and 2008, BLMIS was subject to at least five reviews by the U.S. Securities and Exchange Commission("SEC") and a European accounting firm which was conducting a review of BLMIS's operations on behalf of a European IA client. As part of a concerted effort overseen by MADOFF to deceive both the SEC and the European accounting firm, CRUPI participated in creating numerous false and fraudulent books and records.
BONGIORNO and CRUPI each personally benefitted from the fraud. BONGIORNO created numerous backdated trades in her own IA accounts held at BLMIS. From 1975 to 2008, BONGIORNO deposited only approximately $920,000 into her own IA accounts; however, she withdrew more than $14 million during that same time period. In addition to her salary, BONGIORNO received more than $325,000 in off the books income from BLMIS. In 2008, CRUPI received payments of more than $2.7 million from Madoff directly out of the BLMIS bank account that held investor funds. CRUPI also received more than $270,000 in off the books income from BLMIS.
BONGIORNO, 62, faces a statutory maximum sentence totaling 75 years in prison: five years on Count One(Conspiracy), 20 years on each of Counts Two and Three(Securities Fraud and Falsifying Books and Records of a Broker-Dealer), five years on Count Four (Falsifying Books and Records of an Investment Adviser), and five years on each of Counts Ten through Fourteen (Tax Evasion).
CRUPI, 49, faces a statutory maximum sentence totaling 65 years in prison: five years on Count One (Conspiracy), 20 years on each of Counts Two and Three (Securities Fraud, Falsifying Books and Records of a Broker-Dealer), five years on Count Four (Falsifying Books and Records of an InvestmentAdviser), and five years on each of Counts Fifteen through Seventeen (Tax Evasion).
The Indictment also seeks forfeiture of at least $154.5 billion from the defendants, representing the alleged proceeds ofthe securities fraud and conspiracy offenses.
CRUPI will be presented before U.S. Magistrate Judge FRANK MAAS in Manhattan federal court.
BONGIORNO will be presented before a U.S. Magistrate Judge in West Plam Beach, Florida.
NOTE: The charges and allegations contained in the Indictment are merely accusations and the defendants are presumed innocent unless and until proven guilty.
Crupi Criminal Complaint: http://www.justice.gov/usao/nys/madoff/crupicomplaintstamped.pdf (June 2010)
Bongiorno Criminal Complaint: http://www.justice.gov/usao/nys/madoff/bongiornocomplaintstamped.pdf (June 2010)
Bongiorno Amended Asset Forfeiture: http://www.justice.gov/usao/nys/pressreleases/August10/bongiornoannetteamendedforfeiturepr.pdf (August 2010)
On June 15, 2010, 63-year-old Samuel Solanky, a/k/a "Samee" Solanky, pleaded guilty to one count of wire fraud in connection with a scheme by which he caused individuals to invest approximately $3 million in a non-existant jewelry business. Solanky also agreed to a $3 million forfeiture.
According to information released by Preet Bharara, the the United States Attorney for the Southern District of New York, Solanky was a pastor who had a religious show on cable television known as "Vandana," which was broadcast in the New York City metropolitan area and elsewhere.
From in or about June 2005 through in or about July 2009, the Solanky engaged in a scheme where he solicited investments from individuals by telling them that he would use their investments to purchase gem stones in India that would be sold to jewelers in the United States. Solanky promised victims that they would receive 100% returns on their investments within a matter of months. Solanky solicited potential investors in part through the religious organizations in which he was involved.
In fact, Solanky did not operate a jewelry business and the money obtained from the victims was not used to purchase gem stones; rather, the victims' money was diverted for Solanky's own use (often wired to various foreign entities or to be withdrawn as cash or through checks payable to the defendant or to "cash." )
Solanky faces a maximum term of imprisonment of 20 years and a maximum fine of $250,000 (or twice the gross gain or loss resulting from the crime), and is scheduled to be sentenced by United States District Judge Stephen C. Robinson on September 29, 2010.
On November 15, 2010, Solanky was sentenced by Chief United States District Judge Loretta A. Preska to 57 months' imprisonment with three years of supervised release, ordered to forfeit $3 million, and ordered to pay $3,026,045 restitution to the victims of the scheme. During his plea allocution, Solanky admitted using fraudulent means to obtain money from individuals, and admitted that he did not have a gem stone business.
"Your Money" Is "My" Money: http://www.brokeandbroker.com/index.php?a=blog&id=451 (see middle of page)
Diamond Dust: Prominent Cuban-American Florida Jeweler Named in Affinity-Fraud Ponzi Scheme: http://www.brokeandbroker.com/index.php?a=blog&id=437:
Regulatory lawyer Bill Singer has analyzed and posted the latest crop of FINRA disciplinary cases