Daniel Bonventre, one of five former aides to Bernard Madoff on trial over the con man’s $17 billion Ponzi scheme, told a jury he didn’t know what “COO” stood for and denied using the corporate title in seeking a $300 million loan from Bank of New York Mellon Corp (BK:US). in 2006.
Bonventre, who had worked for Madoff for 40 years and was a former director of operations in charge of Madoff’s broker dealer unit, made the remarks today under cross examination by prosecutors quizzing him about alleged inconsistencies in the titles he used over the years, including on tax forms.
“You’ve never heard the term COO” even though it’s “one of the most common titles in North America?” Assistant U.S. Attorney Randall Jackson asked Bonventre.
“It seems like a very impressive title,” Bonventre said before agreeing with Jackson that it stood for a company’s chief operating officer.
The criminal trial, now in its fifth month, is the first stemming from the swindle, which collapsed after Madoff’s arrest in December 2008. Madoff, 75, is serving a 150-year sentence in a federal prison in North Carolina after pleading guilty in 2009 to the unprecedented fraud. Bonventre has denied involvement in the Ponzi scheme, saying he was duped like thousands of others.
Prosecutors are attempting to use Bonventre’s presence on the witness stand -- which had been unexpected until a few days ago -- to portray him as a liar whose testimony can’t be believed. Bonventre took the stand yesterday after having told the court last week that he wouldn’t testify.
Help or Hurt
Bonventre’s answers today could either help him or hurt him with the jurors, depending on how they interpret his behavior, said Stuart Slotnick, who represents defendants accused of white-collar crimes and isn’t involved in the case.
“It shows either that he is extremely incompetent and not smart, and thus he could be one that was fooled by Madoff, or it shows that he is intentionally resisting answering questions on cross which the jury may resent,” said Slotnick, of Buchanan Ingersoll & Rooney PC in New York.
In 2006, two years before Madoff’s arrest, BNY Mellon raised his credit limit to $300 million from $75 million based on financial documentation that later turned out to be false, Monika Arora, a vice president at the bank, testified in November. Bonventre was the bank’s contact at Madoff’s firm.
Internal BNY Mellon documents identified Bonventre as Madoff’s “COO and Head of Global Operations and Systems,” a title he denied ever giving the lender. Years’ worth of income-tax filings displayed for the jury showed Bonventre identified himself as Madoff’s controller.
Bonventre said he never noticed the tax forms he signed identified him as Madoff’s controller in the 1990s and 2000s. Later in the same line of questioning Bonventre said he may have noticed the term after all, but that it was partially correct because he was a controller for Madoff in the 1970s.
In response to a question about whether he was close friends with another defendant, Annette Bongiorno, who ran the investment advisory unit at the center of the fraud, Bonventre said he couldn’t define the word “close” and changed his answer about the nature of their relationship three times.
Bonventre also changed his answer repeatedly while under questioning about fake Depository Trust Corp. reports Madoff used to advance his Ponzi scheme by showing false holdings of securities, and which the defendants are accused of helping create to trick regulators. At first, Bonventre said he used real DTC reports to compare them to Madoff’s actual holdings, and later he said he only compared the data -- “in a way.”
In response to an objection from defense lawyers, U.S. District Judge Laura Taylor Swain barred Jackson from asking Bonventre questions which would have required him to acknowledge aspects of the fraud that are already well known.
During his testimony yesterday, Bonventre denied knowing anything about the Ponzi scheme, which prosecutors allege the group supported with millions of fake trades and false account statements that tricked customers into believing their cash was being used to buy securities. No trading took place in the investment advisory business at the center of the fraud.
Bonventre told jurors that when he questioned some of his former boss’s unusual business practices over the years, Madoff gave answers that sounded plausible or sent Bonventre on a “wild goose chase” to make it appear he was interested in fixing perceived flaws.
The other defendants are Joann Crupi, who managed large accounts; and computer programmers George Perez and Jerome O’Hara, accused of writing code to automate the deception as the scheme expanded rapidly in the 1990s.
Prosecutors began presenting testimony by industry experts, Madoff’s accomplices and his former clerical staff in October. Swain said the trial testimony is expected to end this month, followed by jury deliberations.
The case is U.S. v. O’Hara, 10-cr-00228, U.S. District Court, Southern District of New York (Manhattan).
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