Madoff’s RPG Coders Indicted in Ponzi Scam
March 22, 2010 Timothy Prickett Morgan
The two programmers who have been implicated in the massive $36 billion Madoff stock investing Ponzi scheme were indicted last week in New York in the U.S. District Court for the Southern District of New York. This is where the U.S. Attorneys Office originally brought charges against Bernie Madoff and now the coders who helped him defraud investors and fool regulators.
As The Four Hundred reported last fall, Jerome O’Hara, 47, of Malverne, New York, and George Perez, 44, of East Brunswick, New Jersey, were arrested in connection with the Madoff Ponzi scheme on November 13, 2009. They were arraigned before a U.S. magistrate judge in Manhattan on charges of conspiracy, falsifying books and records of a broker-dealer, and falsifying the books and records of an investment advisor. Last Wednesday (March 18), a grand jury in New York indicted both men on those three criminal charges. The Securities and Exchange Commission is bringing a parallel civil lawsuit against the two men in federal court, so more charges are likely.
According to the indictments, which you can read here, O’Hara started working for Bernard L. Madoff Investment Securities in 1990, and Perez joined the firm a year later. O’Hara and Perez are accused of creating the programs that allowed Madoff to hide his Ponzi scheme from the SEC and other authorities. The SEC reviewed Madoff’s books five times between 2004 and 2008, and the programs created by O’Hara and Perez are alleged to have helped the securities firm hide the fact that it was not putting the money given to it by investors in the market, as the programs and documents running on an AS/400 said, but rather engaging in a Ponzi scheme where people were paid false returns using money that came in from new investors while Madoff pocketed the rest.
The U.S. Attorneys Office said in the original case against Madoff, the man, that O’Hara and Perez tried to leave the company in 2006, after the Ponzi scheme was in full swing, and Madoff ordered Frank DiPascali, the finance chief at BLMIS, to give the two men 25 percent raises and more than $60,000 bonuses. The indictment says a lot more money than this was at stake. In April 2006, O’Hara cashed checks worth $976,000 and Perez cached checks worth $289,000. By September 2006, when the authorities were sniffing around, the two demanded 20 percent raises, and by November they got bonuses on top of this of $64,812 (O’Hara) and $60,165 (Perez). So crime apparently paid, and paid a lot more than it looked like back in November. And this probably makes O’Hara and Perez the two highest paid RPG programmers in history.
Both O’Hara and Perez are looking at up to 30 years in prison and over $5 million in fines each if they go to trial and are found guilty of the charges. Madoff is currently serving a 150-year sentence, and at 71, he will have to be reincarnated, die, and come back a second time to finish it out. O’Hara and Perez have told various news outlets that they intend to plead not guilty to the charges.