Ex-Madoff Exec Charged with Fraud
Victims' family members, Steve Davis, left, and Tommy Donahue clasp hands as they react outside federal court in Boston Tuesday, June 12, 2012, after Catherine Greig, who spent 16 years on the run with former Boston mobster James "Whitey" Bulger, was sentenced to eight years in prison for helping to hide one of the FBI's Ten Most Wanted Fugitives. (AP Photo/Elise Amendola) / Elise Amendola
The former chief of operations for Bernard L. Madoff Investment Securities LLC was arrested Thursday on a criminal complaint charging him with conspiracy, securities fraud, falsifying books and records and false filings with the Securities and Exchange Commission, according to the Manhattan U.S. Attorney.
Daniel Bonventre, 63, of Manhattan who was with the Madoff firm for 40 years is expected to appear Thursday before U.S. Magistrate Judge Theodore Katz in Manhattan Federal Court.
According to U.S. Attorney Preet Bharara, Bonventre was the author of Bernie Madoff's fraudulent books for years effectively hiding the doomed state of an investment firm founded on fraud.
The criminal complaint unsealed Thursday charges that Bonventre not only failed to disclose material information about the Madoff investment advisory business but allegedly fabricated basic financial documents to conceal the fraud. Prosecutors charge that with Bonventre's knowledge hundreds of millions of dollars were siphoned out of accounts belonging to Madoff's clients and to use in support of other aspects of his business. In some cases, it is alleged that Madoff's company used client money as collateral to obtain loans.
The complaint also alleges that Bonventre failed to report hundreds of thousands of dollars in income to the IRS.
The complaint disclosed that during the liquidity crisis, BLMIS was required to file financial and operational reports with the SEC. Because the broker-dealer's general ledger reports were inaccurate, as Bonventre allegedly knew, those reports were likewise false, failing to accurately reflect BLMIS's assets and liabilities.
For example, one such report for April 2006, in the midst of the liquidity crisis, failed to reflect at least $299 million in BLMIS liabilities related to $154 million in 1A client's bonds and the $145 million that BLIMS borrowed using those bonds as collateral.
Joseph Demerest, the head of the New York FBI office said Bonventre is "just the latest in a succession of arrests that put to lie Madoff's original contention that he alone was responsible for the debacle."
Bonventre's attorney did not immediately return a call for comment on the charges.
Bonventre faces 77 years in prison if convicted of all the charges against him.