Professional Documents
Culture Documents
MARC LITT~
LISA A. BARONI
Assistant United States Attorneys
Violations of
15 U.S.C. §§ 78j (b),
UNITED STATES OF AMERICA 78q(a), 78ff;
17 C.F.R. §§ 240.10b-5,
- v. - 240.17a-3, 240.17a-5;
18 U.S.C. §§ 371, 2;
DANIEL BONVENTRE, 26 U.S.C. § 7206(1)
Defendant.
COUNTY OF OFFENSE:
NEW YORK
-----------------------------------x
SOUTHERN DISTRICT OF NEW YORK, ss.:
COUNT ONE
(Conspiracy to Commit Securities Fraud, to Create False and
Fraudulent Books and Records of a Broker-Dealer, and to Make
False Filings with the SEC)
2
Means and Methods of the Conspiracy
3
Overt Acts
COUNT TWO
(Securities Fraud)
4
employ manipulative and deceptive devices and contrivances, in
violation of Title 17, Code of Federal Regulations, Section
240.10b-5, by: (a) employing devices, schemes, and artifices to
defraud; (b) making untrue statements of material facts and
omitting to state material facts necessary in order to make the
statements made, in light of the circumstances under which they
were made, not misleading; and (c) engaging in transactions,
acts, practices, and courses of business which operated and would
operate as a fraud and deceit upori persons.
COUNT THREE
(False and Fraudulent
Books and Records of a Broker-Dealer)
COUNT FOUR
(False Filing With the SEC)
5
COUNT FIVE
(Subscribing to False Individual Income
Tax Return for Tax Year 2003)
COUNT SIX
(Subscribing to False Individual Income
Tax Return for Tax Year 2004)
6
COUNT SEVEN
(Subscribing to False Individual Income
Tax Return for Tax Year 2006)
COUNT EIGHT
(Subscribing to False Individual Income
Tax Return for Tax Year 2007)
7
The bases for my knowledge and the foregoing charges
are, in part, as follows:
14. I have been a Special Agent with the FBI for more
than 26 years, and I have been personally involved in the
investigation of this matter. I have a B.B.A. in accounting from
Emory University. From approximately 1983 until 2004, I had an
active license in the State of Georgia as a Certified Public
Accountant. Since approximately 2004, my license has been
inactive. Prior to becoming a Special Agent with the FBI, I
worked for Arthur Andersen LLP, where I participated in audits of
public corporations. Moreover, I have experience investigating
securities fraud and other financial fraud cases.
8
a. Ledgers (or other records) reflecting all
assets and liabilities, income and expense and capital accountsj
and
9
have learned that DiPascali 2 was employed at BLMIS between on or
about September II, 1975, and on or about December II, 2008, the
day that Madoff was arrested.
10
for, among other things, developing and maintaining computer
programs for computers that supported the business of BLMIS,
including its Market Making, Proprietary Trading, and IA
operations.
11
The Ponzi Scheme
BLMIS's Finances
12
operations, but rather included the expenses related to IA
operations with those of the Market Making and Proprietary
Trading operations. Contrary to rules and regulations
promulgated by the SEC and Generally Accepted Accounting
Principles ("GAAP"), the GIL did not accurately account for the
assets and liabilities of the IA operations.
13
d. MSIL maintained a bank account in the united
Kingdom (the "MSIL Bank Account") .
14
BLMIS internal records related to the IA Account show that
between 1997 and 2007, a net total of approximately $307 million
was wired from the IA Account to the IA Brokerage Accounts.
S
BLMIS operated on a fiscal year ending October 31.
15
Account.
16
bonds to BLMIS to be deposited in accounts affiliated with IA
Client A. (The $154 million in FHLB bonds described in this
paragraph and paragraph 34, above, are referred to herein jointly
and severally as the "Client A Bonds".)
records show that the balance owed on the Bank No. 2 LOC reached
a peak of approximately $342 million on or about May 25, 2006,
and was fully repaid by in or about August 2006.
17
and records, had to reflect accurately the use and/or
recipient(s) of the Four Wire Transfers. I have reviewed BLMIS
documents, that appear to bear the handwriting of DANIEL
BONVENTRE, the defendant, and which directed the inclusion of
entries in the G/L, and/or supporting books and records, that
disguised the fact that the Four Wire Transfers related to IA
business operations (including withdrawals by IA Clients). The
G/L entries and other books and records that BONVENTRE caused to
be made, created the appearance that the Four Wire Transfers had
been used to purchase assets for BLMIS (including the Client A
Bonds), when, in fact, they had not been.
18
reviewed the FOCUS Reports filed by BLMIS in the November 2005 -
June 2006 period. Based on my review, it appears that the FOCUS
.Report form requests basic information that amounts to a
condensed version of a broker-dealer's general ledger.
19
ranged from millions to billions of dollars.
20
about as few of BLMIS's IA Clients as possible, thereby
concealing the scale of the IA business; (b) present explanations
of BLMIS's operations that would make it more difficult for the
SEC and or the European Accounting Firm to attempt to corroborate
with third parties the information provided by BLMIS; and
(c) produce documents containing detailed information that
appeared to be genuine.
21
assets; (v) incorporated randomization algorithms to create fake
records reflecting securities transactions that appeared to be
realistic in terms of their size and timing; and (vi) generated
documents that looked like the output of reliable third parties
such as DTC.
22
"European scenario" that was sometimes employed during certain
SEC reviews) in an effort to make it less likely that the
European Accounting Firm would be able to obtain information that
might uncover the fraudulent scheme. As part of this "domestic
scenario," Bernard L. Madoff, DiPascali, O'Hara and Perez, with
the assistance of DANIEL BONVENTRE, the defendant, created
counterfeit DTC reports that purported to show that BLMIS had
custody (at DTC) of the securities reflected on the account
statements that had been sent to the European Clients and/or the
European Custodian.
23
3. Preparation of RVp!nVp Statements
24
4. O'Hara and Perez Announce Their Unwillingness to Create
Additional False Documents
25
Bonventre IA Account.
26
viii. Following the backdated Big Lots
"trade," the Bonventre IA Account reflected a balance of
$182,000.00.
27
(4) the sale of 90,000 shares of
Lucent on April 20, 2004, for a total price of $360,900.00.
28
Hi [BLMIS Employee B]
Thanks
Dan
29
d. BONVENTRE Empties His IA Account
30
Date Amount
2/10/03 $33,300.00
11/12/03 $65,000.00
12/21/04 $18,420.24
1/13/06 $61,900.00
1/17/07 $35,000.00
10/29/07 $60,000.06
31
WHEREFORE, deponent prays that an arrest warrant be
issued for the above-named defendant, and that he be imprisoned
or bailed as the case may be.
KEITH D.
Special
Federal of Investigation
2~f:1;ZilOl0
HGNO~LE THEODORE H. KA
lJ,NiTED S'J:'A'1'ES MAGISTRAT
sotrrHERN'DISTRICT OF N
32