Last week, the Securities and Exchange Commission (SEC) filed a complaint in the U.S. District Court for the Southern District of New York against Daniel Bonventre. Mr. Bonventre is alleged to have made a career of falsifying records in Bernard Madoff's back room operations.
The purpose of the alleged fraud was not only to create enrichment for Madoff's key players, but also to create a false appearance of legitimate income. Apparently, for about three decades, Mr. Bonventre was responsible for the back office operations of the now infamous Ponzi scheme -- also known as Bernard L. Madoff Investment Securities LLC (BMIS). Specifically, he managed the accounting and securities clearing functions.
The SEC claims that Bonventre not only knew investors' monies were not being used to purchase securities, but lined his own pockets to the tune of $1.9 million placing false backdated so-called trades in his own account.
Not surprisingly, this latest filing is the seventh enforcement matter brought in the Madoff matter. Prior SEC actions include those against Madoff, auditors, computer programmers and others involved in the elaborate scheme. Guilty pleas have been entered for criminal charges brought in these matters.
According to the SEC's litigation release Mr. Bonventre hid the liabilities to investors and assets received from them. Mr. Bonventre is alleged by the SEC to have assisted Madoff and his close advisor Frank DiPascali, Jr., in lying to investors and regulators when BMIS operations came under review. The operational losses of BMIS were kept secreted behind a wall of $750 million in investor funds employed to "artificially improve reported revenue and income."
In the words of the SEC, "[w]ith Bonventre's assistance, they made serial misrepresentations to external reviewers by manufacturing reams of false reports and data."
Related Web Resources
Information on SEC Madoff-related matters can be located at accounting and auditing enforcement releases and litigation releases at www.sec.gov.
Contact the New York Wall Street law firm of Gusrae, Kaplan, Bruno & Nusbaum, PLLC, regarding regulatory litigation and enforcement representation.
