Madoff Programmers Traded Silence About Multi-Billion-Dollar Fraud for Relatively Puny Salary Increase


Jerome O’Hara and George Perez, two of Bernie Madoff’s computer programmers who worked in his seventeenth-floor office, were arrested this morning for creating the false documents and trading records that the securities firm used to perpetrate its Ponzi scheme. According to a civil complaint simultaneously filed against them by the SEC, the pair, who had both worked for Madoff since around 1990, almost extricated themselves from the scheme three years ago, in 2006, soon after the now-famous Barron’s story came out questioning Madoff’s methods (a copy of the story was found in their office). Instead, they chose to dig themselves in deeper.

Having doctored up reports given to regulators and the European Accounting Firm to such a great extent, Defendants knew they could not credibly claim they had no idea the House 17 data reflected fictitious trades…Defendants confronted Madoff in September 2006 about their “special” programs. During these confrontations, defendants communicated that they were uncomfortable with the lies they helped to present to external reviewers. Madoff responded to Defendants objections by telling [CFO Frank] Dipascali to offer defendants as much money as possible to keep quiet and not expose the misrepresentations. Defendants thought about it for a period of time and demanded a salary increase of 25%. Their salaries were, indeed, increased by 24.8% in November 2006.

We’d say it probably wasn’t worth it.

SEC Complaint [PDF]
2 Programmers Charged With Aiding Madoff [DealBook/NYT]