The man who allegedly made Bernard Madoff's multi-billion dollar Ponzi scheme possible by cooking the books at the investment firm was indicted today on federal charges of conspiracy, falsifying records, securities fraud and filing false tax returns. Daniel Bonventre had been arrested on those charges on February 25th.
Bonventre, 63, was Director of Operations for Bernard L. Madoff Investment Securities, LLC for 30 years. He had joined the firm in 1968, and in his most recent role allegedly falsified records in order to obtain bank loans -- using a client's bonds as collateral -- in order to raise money to get Madoff's firm through a liquidity crisis triggered by client withdrawals. According to the indictment, the firm should have raised that money by selling stock, but had to take out loans since it had only pretended to acquire stock, a practice at the core of Madoff's Ponzi scheme.
"The charge against Mr. Bonventre is a prosecutorial Hail Mary. He is absolutely innocent and we are looking forward to the trial," said Andrew Frisch, his attorney.
Bonventre remains free on $5 million bail secured by $2 million in assets. He is expected to be arraigned tomorrow in Manhattan Federal Court.
The indictment supersedes one handed up by a federal grand jury a week ago by adding the charges against Bonventre to those already filed against two computer programmers for Madoff, Jerome O'Hara and George Perez.
O'Hara, 47, and Perez, 44, allegedly "developed and maintained computer programs that generate false and fraudulent records," said Preet Bharara, U.S. Attorney for the Southern District of New York.
They are each charged with one count of conspiracy, one count of falsifying records of a broker-dealer, and one count of falsifying records of an investment adviser.
O'Hara's attorney Gordon Mehler told ABC News, "We intend to plead not guilty and therefore Mr. O'Hara is presumed innocent even though it has been more than four months since he's been arrested."
"Mr. Perez will be pleading not guilty to the indictment, which is merely an accusation," Perez's attorney Larry Krantz said. "We will be defending him zealously against the charges."
Bonventre becomes the sixth person charged in connection with the Ponzi scheme, joining Madoff, Perez, O'Hara, former Madoff accountant David Friehling, and Madoff's former CFO Frank DiPascali.
DiPascali, who pleaded guilty last August to multiple counts of fraud, conspiracy, money laundering, perjury and income tax evasion, has been cooperating with officials and reportedly provided information that led to the indictments against O'Hara and Perez.
In a court filing in December, DiPascali's attorney Mark Mukasey wrote of DiPascali's "fruits of…assistance" and said "information he provided contributed to the arrest of three individuals to date."
Mukasey identified O'Hara and Perez but didn't name the third party.
Federal prosecutors filed papers in late February indicating that DiPascali's cooperation with prosecutors will result in an "extraordinary letter" seeking leniency for DiPascali, who faces up to 125 years in prison. He remains behind bars because, even though prosecutors have asked that DiPascali be allowed to return to his New Jersey home prior to sentencing, the judge in the case has rebuffed their requests and set DiPascali's bail at $10 million.
If convicted on all charges, O'Hara and Perez face 30 years behind bars.