Computer whiz duo charged in Madoff scheme

Jerome O'Hara and George Perez allegedly helped the disgraced money manager create false documents to defraud investors.

EMAIL  |   PRINT  |   SHARE  |   RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By Ben Rooney, CNNMoney.com staff reporter

Pieces of Madoff
Many of Bernie Madoff's victims wanted a piece of the felonious financier. This week they could get one: Hundreds of his and Ruth's possessions went up for auction Saturday and they fetched nearly $1 million, a lot more than expected.
Where will the Dow end up in 2010?
  • Up 0% to 10%
  • Up more than 10%
  • Down 0% to 10%
  • Down more than 10%
On board Madoff's boats
The Bull sat docked at Bernard Madoff's Palm Beach house. Now it could be yours -- along with two of his other vessels.

NEW YORK (CNNMoney.com) -- Federal regulators on Friday charged two computer programmers for helping convicted swindler Bernard Madoff perpetrate one of the largest frauds in U.S. history.

The programmers, Jerome O'Hara and George Perez , allegedly took "hush money" in exchange for helping Madoff produce false documents and trading records over a period of 15 years, according to the Securities and Exchange Commission.

"Without the help of O'Hara and Perez, the Madoff fraud would not have been possible," George Canellos, director of the SEC's New York Regional Office, said in a statement.

"They used their special computer skills to create sophisticated, credible and entirely phony trading records that were critical to the success of Madoff's scheme for so many years," Canellos said.

According to the SEC's complaint, O'Hara and Perez helped cook Madoff's books by combining actual positions and activity in the firm's trading business with fake balances held in investor accounts. They allegedly wrote programs that generated "many thousands" of phony documents to substantiate nonexistent trading.

In 2006, the pair had a "crisis of conscience" and attempted to end their involvement in the scheme by deleting nearly all of the 225 illicit programs they had written. But they did not delete the monthly backup tapes.

After the botched attempt at covering their tracks, O'Hara and Perez cashed out "hundreds of thousands of dollars" each from their personal accounts before confronting Madoff and refusing to aid the fraud, the SEC said.

"I won't lie any longer," one of them told Madoff, according to O'Hara's handwritten notes from the encounter.

In response, the SEC said Madoff offered O'Hara and Perez "as much money as necessary to keep quiet." That turned out to be a 25% raise and a one-time bonus of more than $60,000 each. A larger sum would have attracted too much attention, the programmers said.

Madoff, 71, pleaded guilty in March to 11 federal counts related to his operation of a massive, long-running Ponzi scheme, masquerading his investment firm as legitimate when it was nothing more than a front. He was sentenced to 150 years in prison on June 29.

During the decades-long scheme, Madoff would use the funds from new investors to send payments to his more mature investors. He would falsely portray these payments as proceeds from investments, when they were actually stolen money.

Earlier this month, Madoff's longtime accountant, David G. Friehling, pleaded guilty to multiple fraud charges related to the scheme.  To top of page

Features
They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
Some Converse copycats cost big bucks A few bargain brands got swept up in Chuck Taylor's net, but others cost a pretty penny. More
Urban infrastructure gets a second life Railroad beds become parks, power plants become aquariums and slaughterhouses are now art centers as an industrial past turns people-centric. More
Boomtown moms From working mothers raising their kids in RVs to stay-at-home moms who spend their days organizing events for the Oil Wives club, meet the moms of North Dakota's oil boom. More
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.