One of Bernard Madoff's longest-serving employees was sentenced to 10 years behind bars for helping run a $17.5 billion fraud, with the judge giving Daniel Bonventre a break for not being as bad as his former boss. Prosecutors had sought a sentence of more than 20 years.
Mr. Bonventre, 67, ran Madoff's broker-dealer unit for almost 40 years after being hired in the 1960s. He's the first of five former Madoff aides to be sentenced, following their conviction in March.
While Mr. Bonventre knowingly broke the law by filing false documents and misleading investors, he wasn't aware of Mr. Madoff's Ponzi scheme and didn't intend to steal from customers the way his “soulless” former boss did, U.S. District Judge Laura Taylor Swain said at a hearing in Manhattan last week.
Judge Swain, who oversaw a five-month trial that ended in a total victory for the government, said the sentence balances the severity of the scheme with Mr. Bonventre's age and the many testimonial letters she received from his family and community members who described him as a kind and caring person. A long sentence is still warranted, the judge said.
“We all stand among the smoking ruins of thousands of shattered lives,” Judge Swain said to Mr. Bonventre as he sat expressionless in a black suit, with his family nearby. “Your life has been shattered as well.”
Mr. Bonventre's request to remain free on bail pending appeal was denied today, though Judge Swain also rejected the government's bid to have him jailed immediately. He was ordered to surrender to authorities on Feb. 19. Judge Swain said she would recommend the last year of the sentence be served at home.
The U.S. Probation Office said earlier this year Mr. Bonventre should get 20 years behind bars. Prosecutors argued the sentence should be even longer, citing his failure to come to terms with his crimes.
Mr. Bonventre, standing at a podium to address the court before being sentenced, said he “failed to see the monster behind the man,” referring to Mr. Madoff. “There is a simple truth: Bernie Madoff lied to me every day and I believed and trusted him.”
Mr. Bonventre was one of two defendants who took the witness stand during the trial, a move later criticized by jurors who said he came off as a liar, in denial about his actions.
Judge Swain described Mr. Bonventre as a “pampered, compliant and overcompensated worker” who was led astray and intentionally blinded himself to the fraud he was supporting.
These are “devastatingly serious crimes,” Judge Swain said. “Dreams and trusts were shattered, charities and foundations were wiped out and innumerable victims were left wondering, 'What next?'”
Mr. Bonventre's lawyer, Andrew Frisch, told Judge Swain before the sentence was handed down that his client's faith and conscience barred him from taking responsibility for involvement in the fraud, because he wasn't a willing participant.
“It's not about arrogance. It's not about hubris. It's reality,” Mr. Frisch said today.
Mr. Madoff's fraud collapsed after his arrest on Dec. 11, 2008, revealed that the New York-based investment advisory business spent customer cash and used it to pay investors their fake profits instead of using it to buy securities. The five defendants had used millions of fake trade confirmations and bogus paperwork to dupe customers for decades.
Mr. Madoff, 76, is serving 150 years in a federal prison in North Carolina after pleading guilty in 2009. Mr. Bonventre, hired by Mr. Madoff in the 1960s, has always denied involvement in the scheme, saying he was duped by Mr. Madoff like thousands of others. The other former workers who will be sentenced in the coming days are Annette Bongiorno, 67, who ran the investment advisory unit at the center of the fraud; Joann Crupi, 54, who managed large accounts; and computer programmers George Perez, 48, and Jerome O'Hara, 51, who automated the scam as it grew rapidly in the 1990s.
Mr. Bonventre was ordered today to forfeit $155 billion, a sum the judge said he is jointly liable for with Mr. Madoff, Mr. Madoff's brother Peter, as well as Mr. Bonventre's co-defendants in the scheme and others who pleaded guilty.
The forfeiture amount is based on the money that went in and out of Mr. Madoff's company since 1992, Judge Swain said.
The fraud, hatched in the 1970s, targeted thousands of wealthy investors, celebrities, retirees and Jewish charities. It unraveled in 2008 when the economic crisis led to more withdrawals than Mr. Madoff could pay. In addition to $17.5 billion in principal, the collapse erased about $47 billion in fake profit that customers thought was being held in their accounts.
Mr. Bonventre provided a window into his world with his testimony in a crowded courtroom in February. Under questioning by his lawyer, the former executive denied knowing anything about the scheme.
He said that when he questioned some of Mr. Madoff's unusual business practices over the years, his former boss gave answers that sounded plausible or sent Mr. Bonventre on a “wild goose chase” to make it appear he was interested in fixing flaws.
Other defense witnesses said Mr. Bonventre helped his own son, who also worked for Mr. Madoff, tackle a drug addiction after he repeatedly fell asleep under his desk. Prosecutors claimed the son's job was another perk for aiding the fraud.
During his cross-examination by prosecutors, Mr. Bonventre said he didn't know what “COO” stood for and denied using the title in seeking a $300 million loan from Bank of New York Mellon Corp. in 2006 — a central piece of evidence in the case.
BNY Mellon raised Mr. Madoff's credit limit to $300 million from $75 million based on financial documentation that turned out to be false, the U.S. said. Internal bank documents identified Mr. Bonventre as Mr. Madoff's “COO and Head of Global Operations and Systems.”
In response to a question about whether he was close friends with Ms. Bongiorno, with whom he'd worked for decades, Mr. Bonventre said he couldn't define the word “close” and changed his answer about the nature of their relationship three times.
While Mr. Bonventre participated in the massive fraud, he isn't “fundamentally corrupt,” Judge Swain said today. “Mr. Bonventre put his life and the lives of others in the wrong hands.”