A former executive for imprisoned swindler Bernard Madoff's firm was arrested Thursday and charged with concealing the scope of its multibillion dollar fraud and using at least $750 million of investor money to support the company's trading arm.
The executive, Daniel Bonventre, was described by investigators as the director of operations of the Madoff firm from at least 1978 until its collapse in December 2008 when Madoff was arrested.
Madoff, 71, pleaded guilty last March to running Wall Street's biggest investment fraud of as much as $65 billion and he is serving a 150-year prison sentence.
Investigators and the trustee winding down Bernard L. Madoff Investment Securities LLC have previously said the activity took place in the firm's investment arm, but the charges against Bonventre directly link the investment and proprietary trading operations.
U.S. prosecutors and the FBI said in a statement that Bonventre, 63, who started working for Madoff in 1968, had broad responsibility for the general ledger, financial statements, accounting records and supervising back office staff.
The statement said he supervised "the use and reconciliation of BLMIS bank accounts through which the market making, proprietary trading, and IA business operations were funded." He also supervised "settlement and clearing of trades executed by the market making and proprietary trading operations."
Bonventre's lawyer could not immediately be reached for comment. Bonventre was scheduled to make an initial appearance in Manhattan federal court later on Thursday.
The former Madoff executive is accused of concealing the scope of the investment arm's operations and understating BLMIS's liabilities by billions of dollars, prosecutors said.
"From 1997 to 2008, more than $750 million of IA investor funds were used to support BLMIS's market making and proprietary trading operations, but were accounted for on BLMIS's books and records, including the general ledger, so as to conceal the true source of the funds," the statement said
A criminal complaint filed in court charges Bonventre with securities fraud, conspiracy to commit securities fraud, falsifying books and records of a broker-dealer, false filings with the U.S. Securities and Exchange Commission and filing false tax returns. He faces a maximum sentence totaling 77 years in prison.
Bonventre is the sixth person to be criminally charged with involvement in the huge fraud, which swindled thousands of big and small investors, including charities.
Bonventre was also charged in a separate civil complaint filed by the U.S. Securities and Exchange Commission with falsifying accounting records and siphoning at least $1.9 million in investor funds into a personal BLMIS account.
The case is USA v Daniel Bonventre, U.S. District Court for the Southern District of New York, No. 10-mag-385.
