Bernie's IT guys and "House 17"
Two former employees for Bernard Madoff programmed an old IBM computer to generate false records that concealed the money manager's massive Ponzi scheme and were given hush money when they threatened to stop lying, federal prosecutors said Friday.
Madoff gave orders to pay the pair "whatever they wanted to keep them happy," a criminal complaint said.
The computer programmers, Jerome O'Hara, of Malverne, N.Y., and George Perez, of East Brunswick, N.J., were arrested Friday at their homes. They were to appear in a Manhattan court to face conspiracy, falsifying records and other charges.
"Without the help of O'Hara and Perez, the Madoff fraud would not have been possible," George S. Canellos, director of the Securities and Exchange Commission's New York Regional Office, said in a statement.
Their attorneys did not immediately return calls for comment.
Prosecutors alleged that O'Hara and Perez were hired by Madoff's firm in the early 1990s to develop and maintain programs using a computer known as "House 17." The programs allowed Madoff to generate account statements for thousands of clients "that purported to confirm the purchases of securities that, in fact, had not been purchased," the complaint said.
Madoff and his chief financial officer, Frank DiPascali, directed the defendants to use their computer skills to produce other false documents designed to deceive the SEC. The agency brought similar charges against the men on Friday in a parallel civil complaint.
In what the SEC called "a crisis of conscience" in 2006, O'Hara and Perez deleted 218 of the 225 special programs from the House 17 computer, and withdrew thousands of dollars from their own accounts with the firm, authorities said.
Comment: You know that IT guys had to be behind perpetuating the fraud. Jail time needed for those guys. By the way ... where was the audit department? Risk management? Etc.
As an "IT guy," I've told the last couple bosses I've had flat out that it's imperative to have IT staff you can trust. They truly have the ability and power to do and see anything that goes on at the workplace. Granted, it usually leaves a trail, but by then the damage is done!
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