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Article

Madoff Programmers Busted

The pair is looking at spending the rest of their lives in prison

Two Madoff computer programmers who authorities say made the whole decades-long $65 billion Ponzi scheme possible were arrested Friday and brought up on criminal charges of conspiracy, falsifying the books and records of a broker-dealer and falsifying the books and records of an investment advisor. The SEC, which never tumbled to the ripoff before Madoff up and confessed last December, added civil charges.

The pair is looking at spending the rest of their lives in prison.

Madoff, their 71-year-old employer, is already doing 150 years. He has consistently maintained that he acted alone.

John O’Hara, 46, of Malverne, Long Island and George Perez, 43, of East Brunswick, New Jersey were arrested at their homes first thing Friday morning by the FBI and hauled off to New York to be arraigned.

They worked for Bernie Madoff from the early 90s until last December when he was busted after confessing to the epic fraud.

The government says the “computer codes and random algorithms they allegedly designed served to deceive investors and regulators and concealed Madoff’s crimes.”

Their programs supposedly created books and records for a subset of Madoff’s clients that hid the scope and nature of the business; changed the names of account holders to explain to the SEC why it couldn’t find client securities at the Depository Trust; created false and fraudulent order entries, execution reports and commission statements; created false documents to make it look like Madoff bought and sold securities in London; and created false client statements.

There is no evidence that Madoff ever traded a dime.

In 2006 in what the government called a “crisis of conscience” after the SEC and a European accounting firm started poking around, the pair destroyed or at least attempted to delete 218 of the 225 IBM mainframe programs written to cover Madoff’s tracks and closed their personal accounts with Madoff’s firm, reportedly withdrawing hundreds of thousand of dollars each.

After O’Hara told Madoff a few months later in a handwritten note found by the FBI “I won’t lie any longer” they got hush money to keep quiet.

Madoff reportedly instructed that they be given “whatever they wanted to keep them happy.” Their salaries were upped 25% and they got paltry $60,000 bonuses so as not to attract attention.

The men are only the fourth and fifth Madoff people to be charged.

Madoff’s second-in-command Frank DiPascali and his auditor David Friehling have guilty and await sentencing.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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