By Joseph Ax
NEW YORK (Reuters) - Only minutes into the prosecution's questioning of former Bernard Madoff aide Daniel Bonventre at trial on Wednesday, it was clear he was in for a long day.
Assistant U.S. Attorney Randall Jackson asked Bonventre repeatedly whether he was "close friends" with one of four co-defendants accused of helping to conceal Madoff's decades-long, multibillion-dollar fraud, former portfolio manager Annette Bongiorno. Bonventre repeatedly said he did not know what Jackson meant.
"You went to college, correct?" Jackson asked with a note of frustration in his voice. "Do you have any difficulty with the definition of the word ‘close'?"
A flustered Bonventre eventually said, "Yes, I struggle with the meaning of ‘close.'" Bonventre did, however, acknowledge that he and Bongiorno were friendly colleagues.
Bonventre, 67, who worked at Madoff's firm for 40 years, is the first of five former employees on trial in federal court in Manhattan to take the unusual step of testifying. The trial began in October, nearly five years after the December 2008 arrest of Madoff, now 75 and in prison.
The other defendants charged with helping Madoff conceal his fraud by using false documents and fake trades, Bongiorno, portfolio manager Joann Crupi and computer programmers Jerome O'Hara and George Perez, have not made a final decision on whether they will take the stand.
All five have argued they were unaware of Madoff's fraud, which cost investors an estimated $17 billion in principal losses. Under questioning from his lawyer, Bonventre said he only learned of the scheme when Madoff was arrested.
Madoff pleaded guilty in March 2009 and he is serving a 150-year prison sentence.
Wednesday's testimony drew a crowd of onlookers, including high-ranking members of the U.S. Attorney's office, as Jackson challenged Bonventre on everything from his corporate title to his tax returns.
Putting his hands on his hips and widening his eyes in disbelief, Jackson's body language seemed aimed at convincing the jury that Bonventre, who directed the firm's broker-dealer unit, simply could not be believed.
Earlier in the trial, two former Madoff aides who are cooperating with prosecutors testified that Bonventre helped create forged versions of statements showing the firm's securities holdings at an outside clearinghouse.
On Wednesday, Bonventre said he became aware of a project to print statements but did not work on it. He said Madoff explained to him that he wanted to print his own versions rather than purchase paper statements from the clearinghouse to save money. That did not make sense, Bonventre said, because by that time the firm largely received the information electronically.
"This raised no red flags for you?" Jackson asked.
Bonventre replied that he told Madoff the project was unnecessary, but he said he did not think it was suspicious. Prosecutors charge that the fake statements were used to fool regulators into believing the firm's investment advisory unit was legitimate.
Bonventre's lawyer, Andrew Frisch, pointed out during questioning of his client that Bonventre's son, two stepsons, cousin and nephew all worked at Madoff's firm at different times.
Frisch asked Bonventre whether he would have helped get them those jobs had he known of the fraud.
When Bonventre said no, Frisch asked, "Any doubt about that?"
"None whatsoever," Bonventre said.
The testimony is scheduled to resume on Thursday.
The case is USA v. O'Hara et al, U.S. District Court, Southern District of New York, No. 10-cr-0228.
(Reporting by Joseph Ax; Editing by Grant McCool)