Two Ex-Madoff Employees Arrested As Part of Scheme

13 Nov 2009

http://www.cnbc.com/id/33907757/

Two former workers of imprisoned Ponzi schemer Bernard Madoff have been arrested in connection with the 65 billion dollar fraud.

Jerome O'Hara and George Perez, both former computer programmers for Bernard L. Madoff Investment Securities, were taken into custody Friday morning at their homes by agents of the FBI.

O'Hara and Perez are charged in a criminal complaint with conspiracy, falsifying books and records of a broker-dealer, and falsifying books and records of an investment adviser.

They are scheduled to be arraigned in federal court later on Friday.

The action comes as a company created by Madoff that owns one-half of a $25 million corporate jet has filed for bankruptcy protection.

Irving Picard, the court-appointed trustee liquidating Madoff's investment firm, made the Chapter 11 filing for BLM Air Charter on Thursday in Manhattan bankruptcy court.

BLM's assets include a 50 percent stake in an Embraer Legacy 600 jet and a $770,000 bank account.

BDG Aircharter, a unit of Syosset, New York, real estate company Blumenfeld Development Group, owns the other 50 percent stake in the jet, the filing shows.

According to published reports, Blumenfeld principal Ed Blumenfeld lost a significant sum investing with Madoff, who prosecutors say ran a $65 billion Ponzi scheme.

Picard said he filed the bankruptcy petition because Rolls-Royce threatened to terminate a warranty agreement with BLM and BDG today, Nov. 13, unless it received $181,000 due.

The trustee said he wanted to halt the termination and avoid a potential "significant loss in value" to the aircraft.

BLM Air Charter has between $10 million and $50 million of both assets and debts, the filing shows.

Picard is trying to preserve the value of Madoff's estate and maximize recovery for victims of the Ponzi scheme.

He has recovered $1.4 billion of assets, but identified $21.2 billion of investor losses.

According to Embraer's website, the Legacy 600 jet can seat 14 people and travel up to 3,400 miles.

A Saturday auction at a Manhattan hotel of items once used by Madoff and his wife Ruth may raise several hundred thousand dollars, also to benefit Madoff victims.

Bernard Madoff is serving a 150-year prison sentence in North Carolina.

The case is In re: BLM Air Charter, U.S. Bankruptcy Court, Southern District of New York, No. 09-16757.