NEW YORK — Sex and romance flourished in the offices of disgraced financier Bernard Madoff even if real investing did not, the government has revealed, disclosing among other revelations that even the Ponzi king himself was involved in a love triangle with a subordinate now facing trial.
But the government’s foray into sharing bedroom secrets was just a tiptoe, as prosecutors refused to get into the details or identities of those involved in the dalliances without the blessing of a federal judge.
Five of Madoff’s former employees pleaded not guilty Friday in federal court in Manhattan to the latest indictment in the case. Their trial is due to start Oct. 7.
One defendant was in a love triangle with Madoff, and four of the five defendants were among those involved romantically or sexually, authorities said. The government said even investors got involved.
Madoff was arrested in December 2008 and later admitted to a multi-decade fraud that cost thousands of investors about $20 billion. He is serving a 150-year prison sentence.
Though prosecutors noted the various personal relationships among Madoff employees and customers, they asked U.S. District Judge Laura Taylor Swain to exclude evidence of them from the trial, saying it was “unduly prejudicial.”
“Because of the inflammatory nature of this evidence, we do not catalog it here, although the government certainly can at the court’s request,” prosecutors wrote.
“Suffice it to say that the government’s investigation has revealed that, over the course of the multi-decade fraud alleged in the indictment, a number of Madoff Securities employees and customers – including expected witnesses, defendants and others – were engaged in romantic or sexual relationships,” they added.
Defense lawyers and prosecutors declined to comment on the submission Friday.
Attorney Maurice Sercarz, who represents Annette Bongiorno, Madoff’s former longtime secretary, said in an email that it would be irresponsible to comment until he knows who is making the allegation and precisely what is being alleged.
“I assume we will find out in due course,” he said.
The revelations came just before defense lawyers asked Swain at a hearing Friday to delay the trial, saying a rewritten indictment by prosecutors made claims for the first time that some defendants were told to create false documents, suggesting they knew about the fraud.
“I was rather shocked,” said attorney Larry Krantz, representing computer programmer George Perez.
He said it represented “a significant ratcheting up of the language” and created “a far more inflammatory document.”
He said the rewritten indictment also newly alleges that defendants knew funds were not being invested as promised to investors and that some defendants misappropriated funds.
Attorney Andrew Frisch, representing Daniel Bonventre, Madoff’s director of operations for investments, agreed, saying the rewritten indictment for the first time alleges that his client knew Madoff was misappropriating investor money and claimed Bonventre was converting it for his own use.
“It’s a sea change and it’s a large one,” said attorney Eric R. Breslin, representing Madoff back office worker JoAnn Crupi.
He called it a “massive rewrite” of the indictment that will cost defendants a small fortune as their attorneys adjust the defense.
The judge refused to delay the trial, saying prosecutors had not added charges or defendants. And a prosecutor said the government was not making new allegations.