Nothing dogs a good ponzi scheme like the death of a client. But for Bernie Madoff's henchman, all you had to was (allegedly) draw up a new account.

Bloomberg's Erik Larson was on the scene for the trial of Annette Bongiorno and Joann Crupi, two of Madoff's associates in his investment advisory unit. From Bloomberg:

While Madoff usually backdated trades to diminish payouts to the estates of clients who died, he couldn’t do that for Jacques Amsellem, a French customer since the late 1970s, because the man’s lawyer didn’t alert the firm to the death until two months later, Frank DiPascali, 57, testified today at the federal trial of five former colleagues in Manhattan.

Annette Bongiorno and Joann Crupi, defendants in the case who ran Madoff’s investment advisory unit, created a new account from scratch for Amsellem and filled it with losses on short positions for Microsoft Corp. and Novell Inc. to offset fake gains in his original accounts, [former associate Frank] DiPascali testified.

It's just that easy!

Read the full report at Bloomberg »

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There is a way that one expects visits with jailed criminals to go: typically, there's guilt, contrition, the accepting of responsibility. Not so with Bernie Madoff, serving 150 years, the executor of the world's most famous Ponzi scheme.

As the five-year anniversary of the discovery of his crime approaches — is that even something worth keeping an anniversary for? — The Wall Street Journal's Sital Patel sought out comment from the convicted fraudster. What she found over a two-hour sitdown at a comfy Butner, N.C. prison was a man who basically pointed fingers while raising other fingers, to boot. Haters, it appears, gonna hate.

The 75-year-old, dressed in beige polyester pants and shirt with a matching canvas belt, showed no signs of stress. He told the occasional joke and said he was lucky to be in Butner, as it had a reputation of being "very laid back" and is kind of like a "camp."

"This is as good as it gets," said Mr. Madoff. He explained that the Federal Bureau of Prisons "put you where you will survive."

He would later say that the people he conned should have known better, that they didn't ask good questions (Rob Ford has some thoughts on this), called the whistleblower an "idiot," and reminisced fondly about his days as a financial power player.

So excellent was he at financial prognostication, in fact, that he boasted that he saw the housing bubble burst coming. How? Because his young African-American golf caddy was able to buy and sell houses.

He said he didn't need credit. He would buy homes and flip them for a profit. I told my wife, 'This is the end.'

Of course, history proves that the 75-year-old former investment banker was alas unable to use his crystal ball to foresee his eventual conviction in 2008 for operating a Ponzi scheme that bilked investors out of more than $50 billion. He pleaded guilty to 11 felony counts in 2009, and was sentenced to the maximum 150 years in jail.

The profile comes at a time when the Manhattan U.S. Attorney's office is in the process of investigating J.P. Morgan, which enjoyed a two-decade-long relationship with Madoff, for failing to provide regulators with a report of Madoff's suspicious behavior, even though it did with a British agent more than a month before he was arrested. It's likely that J.P. Morgan will be fined.

While Madoff does tell Patel that he despairs the fact he's been cut off from his family, including his wife and also-jailed brother Peter, the profile ends on this queasy little note:

His son Andrew Madoff refuses to talk to him and won't allow his wife to speak to him either, he told me. Mr. Madoff briefly brought up his other son, Mark, who committed suicide following the revelations of his father's Ponzi scheme. Mr. Madoff said he regretted that happened but showed little emotion.

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JPMorgan Chase has agreed to pay $1.7 billion to victims of Bernie Madoff's ponzi scheme, according to a statement from the United States Attorney for the Southern District of New York. [via Bloomberg News]

U.S. Attorny Preet Bharara will hold a press conference today at 1:15 p.m. EST. 

Bharara will announce two felony violations of the Bank Secrecy Act against JPMorgan.  Those criminal charges will be deferred for two years.  

Here's the press release: 

A press conference will be held today to announce criminal charges against JPMorgan Chase Bank, N.A. for two felony violations of the Bank Secrecy Act in connection with its relationship with Bernard L. Madoff Investment Securities, a deferred prosecution agreement with the bank, and related civil actions.  The criminal charges against JPMorgan will be deferred for two years under an agreement requiring JPMorgan, among other things, to admit to its conduct; pay $1.7 billion to victims of Madoff’s fraud; and to reform its anti-money laundering policies.  The $1.7 billion payment by JPMorgan is the largest ever bank forfeiture, and also the largest ever Department of Justice penalty for a Bank Secrecy Act violation. 

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Another day, another $1.7 billion in fines for JP Morgan. This time, it's for failing to catch Ponzi schemer Bernie Madoff as it managed his ill gotten gains. Now the bank has to admit that it didn't have the systems in place to catch Madoff and implement them under a deferred criminal prosecution agreement.

You could call this a case of "too big to manage," one of anti-Wall Street crusader Senator Elizabeth Warren's (D-MA) favorite catchphrases.

Back in November, she used it to talk about reinstating Glass-Steagall, the regulation that once split commercial and investment banks.

"The new Glass-Steagall Act would attack both 'too big' and 'to fail,'" Warren said..."It would reduce failures of the big banks by making banking boring, protecting deposits, and providing stability to the system even in bad times. And it would reduce 'too big' by dismantling the behemoths, so that big banks would still be big—but not too big to fail or, for that matter, too big to manage, too big to regulate, too big for trial, or too big for jail."

In terms of management, the Madoff case is a catastrophe arguably worse than the London Whale.

Sure, the London Whale ended up costing JP Morgan $6 billion, and it was born in the bank's own Chief Investment Office, but that failing trade was only hidden from JPM's execs for about half a year. Madoff managed to fool everyone for decades.

Well, almost everyone. There were people at JP Morgan who sounded the alarm, according to Iriving Picard, the trustee appointed by New York's bankruptcy trustee to review Madoff's case for his "clients".

Picard's 2011 report indicates that two JPM executives knew something was wrong with Madoff, Risk Chairman John Hogan and COO Matt Zames.

Here's a quote from Hogan back in 2007 (From Picard's report, via CNN Money):

"For whatever it['s] worth, I am sitting at lunch with Matt Zames who just told me that there is a well-known cloud over the head of Madoff and that his returns are speculated to be part of a [P]onzi scheme."

So how did something like this get lost? Banks are supposed to file 'Suspicious Activity Reports' for this kind of thing. Those go to the Department of Justice.

The DOJ, for its part, gets 1.6 billion of these SAR reports a year, and JP Morgan files up to 250,000 of them itself.

Still, two high level executives had their suspicions about Madoff a year and a half before he was arrested. They won't penalized for it though. That's part of the deal with the DOJ, according to the Wall Street Journal.

Take that as you like it.

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U.S. Attorney Preet Bharara just held a press conference about the $1.7 billion fine JP Morgan must pay for its negligence in allowing Bernie Madoff to launder his ill gotten gains through the bank for decades.

"For years JP Morgan repeatedly ignored warning signs & allowed suspicious round-trip transactions through Madoff’s account," said Bharara.

But that's not all.

What is clear from Bharara's description of the bank's relationship with Madoff, is that JP Morgan was aware of the Ponzi scheme before Madoff's arrest.

In 2007 and 2008 it became increasingly clear to JP Morgan's top brass that something was awry.

Instead of alerting U.S. authorities, however, the bank made sure that none of its money was in jeopardy first.

The bank itself was invested with Madoff through a number of feeder funds. According to Bharara, in the fall of 2008, a JP Morgan memo laid out what was wrong with Madoff. It questioned his "odd choice of a one man accounting firm, " and said that there were "various elements of this story that" made the bank "nervous."

Two weeks later, the bank sent a memo to UK regulators saying that Madoff's returns were suspicious.

That was around October/November 2008, and as that was going on, JP Morgan also took $275 million of its money out of Madoff feeder funds.

He was arrested on December 11, 2008.

"JPMC connected the dots when it mattered to its own profit," said Bharara, "but wasn’t so diligent..." when it came to its obligations to report illegal activity.

In case you missed the full ruling, aside from admitting guilt and paying a $1.7 billion fine, JP Morgan has a two year deferred prosecution. That means it has to cooperate with the DOJ for two years and "reform its anti-money laundering policies."

Executives that knew about Madoff, for the record, will not be prosecuted as individuals. That's part of the deal.

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Michael Lewis's new book "Flash Boys," which investigates the unfairness of high-frequency trading on Wall Street, has a great section on how John Schwall, the former RBC global head of equities product management, came to learn that Credit Suisse — among other banks — was operating a "dark pool" that allowed high-frequency traders to get in front of stock trades of less sophisticated brokers, allegedly increasing the cost of investing in stocks.

He looked it up on Linkedin — even though it was supposed to be a big secret. The takeaway is that while companies with highly sensitive information may believe their employees are keeping their mouths shut, they're often also using LinkedIn to boast about what they're working on.

Schwall had become disillusioned by Wall Street while working at Banc of America Securities during the period when it merged with Merrill Lynch. The deal saved Merrill, which had ruined itself in the credit crisis of 2008. Yet its employees received huge bonuses while many of Schwall's colleagues were laid off.

Schwall went to work at RBC to join Brad Katsuyama, who was on a jihad to uncover the way high-frequency traders were cheating retail investors out of the correct prices of stocks. (Briefly, Lewis alleges that because banks with high-frequency trading operations are able to make trades quicker than regular traders do, they can "see" incoming orders at one price, and buy and sell the stock before the order is executed, so that the cost of the investment goes up for the original buyer. Dark pools — non-transparent stock exchanges run by investment banks — let this happen without anyone being able to prove that their trades were manipulated.)

While at RBC, Schwall found out from reading the trade press — and searching LinkedIn — that Credit Suisse operated a dark pool but "tried to appear as if it had nothing to do with high-frequency trading," Lewis writes.

Credit Suisse declined Business Insider's request for comment on Lewis' characterization of events. But it's a matter of public record that as far back as 2009 Credit Suisse had not been concealing its dark pool. Credit Suisse's head of U.S. equity trading, Dan Mathisson, testified on the topic to the U.S. Senate that year, for instance. And we're told that the bank has opt-out clauses that allow investors to avoid dark pools.

Nonetheless, Schwall began looking up Credit Suisse staffers' resumes on LinkedIn. Even though Credit Suisse required its staff to abide by non-disclosure agreements, Lewis says, for some reason staffers listed their accomplishments on their LinkedIn resumes. Lewis writes that Schwall started by looking for Josh Stampfli, "who had joined Credit Suisse after seven years spent working for Bernie Madoff."

Stampfli was apparently the executive in charge of electronic trading at Credit Suisse and ran the bank's dark pool. Lewis writes:

The Linkedin searches became a new obsession. The former Madoff employee's profile led him to the people who worked for the former Madoff employee, who led him to the people who worked for them, and so on. Even as Credit Suisse tride to appear as if it had nothing to do with high-frequency trading, its employees begged to differ. Schwall dug out dozens of examples of Credit Suisse's computer programmers boasting on their resumes about "building high-frequency trading platforms" and "implementing high-frequency trading strategy," or of experience as a "quantitative trader on equity and equity derivatives: high-frequncy trading."

Credit Suisse claimed that its dark pool had nothing to do with high-frequency trading, and yet it employed, in and around its dark pool, a mother lode of high-frequency trading talent.

By the time he'd finished, Schwall had built the entire Credit Suisse dark pool organization chart.

You can see Josh Stampfli's resume on LinkedIn right here:

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Five years ago Sunday, Bernie Madoff was sentenced to 150 years in prison for running the biggest fraudulent scheme in U.S. history. Even now, only a few of his victims have since regained all of their losses.

A well-respected financier, Madoff convinced thousands of investors to hand over their savings, falsely promising consistent profits in return. He was caught in December 2008 and charged with 11 counts of fraud, money laundering, perjury, and theft.

Here's how Madoff conned his investors out of $65 billion and went undetected for decades:

Madoff used a so-called Ponzi scheme, which lures investors in by guaranteeing unusually high returns. The name originated with Charles Ponzi, who promised 50% returns on investments in only 90 days.

Ponzi schemes are run by a central operator, who uses the money from new, incoming investors to pay off the promised returns to older ones. This makes the operation seem profitable and legitimate, even though no actual profit is being made. Meanwhile, the person behind the scheme pockets the extra money or uses it to expand the operation.

To avoid having too many investors reclaim their "profits," Ponzi schemes encourage them to stay in the game and earn even more money. The "investing strategies" used are vague and/or secretive, which schemers claim is to protect their business. Then all they need to do is tell investors how much they are making periodically, without actually providing any real returns.

Ponzi schemes aren't usually very sustainable. The setup eventually falls apart after: (1) The operator takes the remaining investment money and runs. (2) New investors become harder to find, meaning the flow of cash dies out. (3) Too many current investors begin to pull out and request their returns. 

In Madoff's case, things began to deteriorate after clients requested a total of $7 billion back in returns. Unfortunately for Madoff, he only had $200 million to $300 million left to give.

Another reason Madoff managed to fly under the radar for so long (despite multiple reports to the SEC about suspicions of a Ponzi scheme), is because Madoff was a well-versed and active member of the financial industry. He started his own market maker firm in 1960 and helped launch the Nasdaq stock market. He sat on the board of National Association of Securities Dealers and advised the Securities and Exchange Commission on trading securities. It was easy to believe this 70-year-old industry veteran knew exactly what he was doing.

Madoff really only made off with $20 billion, even though on paper he cheated clients out of $65 billion, according to CNNMoney. That's hardly any consolation for his thousands of investors, the full list of whom can be found with WSJ here.

The 150-year sentence, more symbolic than literal, was followed by other convictions related to Madoff's scheme. In March this year, five of Madoff's employees were found guilty for their part in the Ponzi scheme. Most recently, Madoff's accountant and lawyer is also facing up to 30 years in prison for his role.

There are several other notable Ponzi schemes in history, including Allen Stanford's which stole $8 billion and Tom Petters' that cheated investors out of $3.7 billion. But as far as scale goes, Madoff wins by a landslide.

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Andrew Madoff, the son of Ponzi schemer Bernie Madoff, died from mantle-cell lymphoma, CNBC reports. He was 48.

Andrew Madoff's attorney confirmed to CNBC that he had died Wednesday morning at Sloan Kettering Memorial Hospital in New York.

Andrew was one of Madoff's two sons. The younger Madoff son, Mark, committed suicide in 2010.

Following Mark's suicide, Madoff's wife, Ruth, cut off contact from Bernie, who is serving his sentence in Butner, North Carolina.

Madoff was arrested and sentenced to 150 years in federal prison for orchestrating the largest financial fraud in history.

Last year, Andrew told People Magazine that he would "never forgive" his father for his crimes. 

"I will never forgive him for what he did," he told People. "He's already dead to me."

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The penthouse where convicted Ponzi schemer Bernie Madoff once lived has sold again for $14.5 million, Page Six reports.

According to the report, the apartment was sold to Lawrence Benenson, who runs a real estate investment and development firm. 

Douglas Elliman had the listing.

In December 2008, Madoff was arrested for securities fraud. For a few months, he was allowed to remain under house arrest in the lavish apartment. 

He was ultimately sentenced to 150 years in federal prison for orchestrating the largest financial fraud in history. He's currently serving his term in a federal facility in Butner, North Carolina.

The apartment looks airy and bright.

The living room offers views of the Chrysler building. It also leads to a landscaped terrace.

The living room also features a fireplace.

NEW YORK (Reuters) - Former customers of Bernard Madoff may soon recover an additional $496.8 million as a result of a settlement with two "feeder funds" that was announced on Monday by the trustee liquidating the swindler's firm.

The settlement, with the Herald Fund SPC and Primeo Fund, both based in the Cayman Islands, is one of the largest obtained by the trustee, Irving Picard, since the failure of Bernard L. Madoff Investment Securities LLC in December 2008.

If approved by U.S. Bankruptcy Judge Stuart Bernstein in Manhattan, the payout would push the sum recovered by the trustee for Madoff customers above $10.3 billion.

That equals about 59 percent of the estimated $17.5 billion of principal they lost in Madoff's decades-long Ponzi scheme. A hearing has been scheduled for Dec. 17. Nearly $6 billion has been distributed so far.

"By any measure, the settlement terms are highly advantageous, not only to BLMIS direct customers with allowed claims, but also potentially to the indirect investors in the Herald Fund," Oren Warshavsky, a lawyer who negotiated the settlement for Picard, said in a statement.

The accord resolves Picard's lawsuits against Herald and Primeo to recoup sums they withdrew from Madoff's firm in the six years before that firm collapsed.

Herald will receive a $1.64 billion claim in the Madoff firm's liquidation, entitling it to "catch-up payments" from four prior distributions that Picard made to customers.

Out of these payments, the first $496.8 million will go to other Madoff customers. Herald will then share in future recoveries obtained by the trustee. The Herald and Primeo funds are both also in liquidation.

Picard has filed more than 1,000 lawsuits against feeder funds that sent customer money to Madoff, and "net winners" who took out more from Madoff's firm than they put in.

His largest settlement is a $7.2 billion accord with the estate of Jeffry Picower, a Florida investor who died in 2009. Picard also recouped $325 million from JPMorgan Chase & Co, once Madoff's main bank.

A separate $4.05 billion fund overseen by former U.S. Securities and Exchange Commission Chairman Richard Breeden will also pay customers and third parties who lost money.

Breeden said he has received 63,553 claims covering an alleged $76.65 billion of losses.

Madoff, 76, is serving a 150-year prison term.

(Reporting by Jonathan Stempel in New York; Editing by David Ingram)

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NEW YORK (Reuters) - Five former employees of Bernard Madoff, convicted in March of helping the fund manager bilk investors of billions of dollars in his massive Ponzi scheme, will be sentenced this week, with prosecutors seeking prison terms of up to 20 years.

Like the six-month trial, one of the longest white-collar trials in recent memory, the sentencings will take time, stretching out over a week in four separate hearings.

The sentencings have been delayed for months, as defense lawyers fought the government's demand that the three men and two women should be ordered to pay billions of dollars in forfeiture they say they don't have.

First up on Monday is former back office director Daniel Bonaventure, followed in the coming days by portfolio manager Annette Bongiorno, computer programmers Jerome O’Hara and George Perez and portfolio manager Joann Crupi.

The five aides were convicted on all counts, including conspiracy and fraud charges, by a federal jury in March. Prosecutors said they knowingly propped up Madoff's fraud by creating fake documents and backdating trades.

The government has requested more than 20 years for Bonaventure and Bongiorno, more than 14 for Crupi and more than eight for O’Hara and Perez.

Defense lawyers have asked U.S. District Judge Laura Taylor Swain to show leniency. At trial, they argued that Madoff duped their clients into believing his investment advisory business was legitimate.

Attorneys for Bongiorno are seeking eight to 10 years, while lawyers for Bonaventure, Perez and O’Hara asked for home confinement or brief imprisonment. Cru pi's lawyers have also asked for a shorter sentence than the government requested.

Prosecutors also have demanded more than $150 billion in forfeiture. While the aides are unable to pay that amount, the size of the forfeiture could affect whether their relatives must relinquish certain assets stemming from their earnings at the firm.

Fifteen people have been convicted in connection with the fraud, estimated to have cost investors more than $17 billion in principal.

Madoff is serving a 150-year sentence after pleading guilty in 2009. His son Andrew Madoff died in September after a long battle with cancer. His other son, Mark, committed suicide in 2010 on the second anniversary of his father’s arrest.

Both brothers, who worked at the firm, always maintained they had no knowledge of the fraud.

 (Reporting by Joseph Ax; Editing by Noeleen Walder and David Gregorio)

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NEW YORK (Reuters) - Victims of Bernard Madoff's massive Ponzi scheme will get afresh $322 million payout if a U.S. judge approves the request by the trustee liquidating the convicted fraudster's firm, bringing the recovery total to more than $7 billion.

The trustee, Irving Picard, said on Monday he would seek permission from a U.S. bankruptcy judge in New York to begin the fifth interim distribution of payments, which would average $299,900 and range from just under $400 to more than $60 million.

The announcement came five weeks after Picard said he had reached three settlements with various defendants, totaling more than $642 million.

All told, Picard has recouped about $10.5 billion, roughly 60 percent of the $17.5 billion of principal he estimated was lost by Madoff customers in the Ponzi scheme, which was revealed in December 2008.

Picard has allowed 2,547 claims related to 2,213 accounts that victims held at Bernard L. Madoff Investment Securities LLC. Once the fifth interim distribution is complete, he said, 1,154 accounts will be fully satisfied.

A court hearing to consider approving the payout has been scheduled for Jan. 15.

Madoff, 76, is serving a 150-year prison term after pleading guilty in March 2009.

Five former Madoff employees were sentenced to prison terms of two to 10 years earlier this month, following their conviction in March of fraud and other charges for helping Madoff conceal his fraud for decades.

Fifteen people, including Madoff himself, have been convicted at trial or pleaded guilty in connection with the Ponzi scheme.

(Reporting by Joseph Ax; Editing by Richard Chang)

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People who have been accused of business crimes frequently reach out to me through PrisonProfessor.com. 

That’s why I wasn’t particularly surprised to receive the following message from a woman who was about to surrender to federal prison.

“I am surrendering on March 9th to Alderson Prison Camp … I would love the opportunity to speak with you. Thank you, Jodi Crupi.”

I spent more than 26 years as a federal prisoner, and I’ve written extensively about strategies that empower defendants who do not adhere to criminal lifestyles. Alderson, I knew, was a minimum-security camp for women in West Virginia. When Martha Stewart served time there, others dubbed Alderson “Camp Cupcake."

I called the phone number Crupi provided to give her advice about life in prison. But first I heard her story.

Since I didn’t know, I asked Crupi about the nature of her crime. She told me that she had built her career working for Bernie Madoff. Crupi, an account manager for Madoff, was one of five defendants convicted of conspiring with the infamous Ponzi schemer.

She described herself as being from a lower-middle class family. Crupi put herself through the University of Arizona but said she was a mediocre student. After graduating, she returned to her home state of New York to seek employment. A temp agency placed her with Madoff’s firm in 1983. The clerical job paid less than $15,000 per year.

“I was intimidated by Madoff,” Jodi said. “His name was on the door of the business and he wielded so much power on Wall Street. For the first several years of my employment, I had a very limited role at the company.”

Crupi’s started her career as a keypunch operator, which is essentially data entry, she said.

As the years passed, Madoff and his team, including Frank DiPascali, expanded Crupi’s role. Crupi insisted that she didn’t have a sophisticated understanding of the financial markets. Yet since she was a loyal employee, eager to please the Madoff team, her levels of responsibility increased. They knew that they could count on her and she said they took advantage of her misguided trust.

Judge Swain ruled that by 2002, Crupi’s role had expanded to the extent that she either knew or should have known about the fraud. Prosecutors said that by 2008 she managed accounts that supposedly had a balance of $900 million, according to Reuters.

But according to Crumpi, her superiors provided the numbers she was supposed to format and she never had access to reports that would suggest the numbers were inaccurate.

Crupi was convicted of multiple counts, including conspiracy, securities fraud, falsifying books and records, and tax evasion. The probation officer who completed Crupi’s Presentence Investigation Report recommended a 14-year sentence. The prosecutor asked for a 28-year term. Despite those calls for decades in prison, Judge Laura Swain, from the Southern District of New York, sentenced Crupi to 72 months in federal prison.

Swain said during sentencing that Crupi had enabled the "devastating effects" of the crime, according to Reuters. The judge said she was “the reassuring voice of Madoff securities.”

"She was compliant with everything and questioned little," Swain said.

Still, Crupi adamantly told me that she didn’t know anything more than what her bosses told her. If they told her to format documents, she complied. If they told her to validate numbers, she did so without thinking there would be any reason not to trust them. When she asked questions about her work, she said, she was given reasonable answers or told that her questions were stupid. She said that she did what her bosses asked. That was why they valued her, and they paid her accordingly.

Within hours of Madoff confessing to running the largest Ponzi scheme in history, Frank DiPascali got a lawyer and cut a deal with prosecutors. DiPascali admitted to being a part of the fraudulent scheme. Since prosecutors would want more, he pledged to provide testimony that would implicate others.

When agents from the SEC, FBI, and United States Attorney’s Office questioned Crupi, she readily told them everything that she had experienced.

“But they didn’t believe me,” she said. “Frank lied and told the prosecutors that I knew what I was doing. The prosecutors refused to deal with me because I didn’t have any information to provide. I couldn’t cooperate because I didn’t have any idea that a fraud was taking place.”

“Frank lied,” Crupi went on. “Like many other people in the firm, I trusted him as a friend and a mentor at work. I certainly wasn’t in a position to know our firm was deceiving thousands of people. They defrauded my partner and me out of hundreds of thousands of dollars, too.”

Crupi pointed out that for her entire career, leaders from multiple government agencies, including the SEC, endorsed Madoff. Titans of business considered him as one of the savviest financiers on Wall Street. He appeared on financial news shows as an expert. No one suspected him of being anything other than a highly ethical professional.

“Why would I think differently?”

The SEC didn’t catch Madoff, Crupi pointed out. When markets turned against him and he couldn’t sustain the scam, he turned himself in.

Neither the SEC, the many banks where Madoff kept accounts, nor the sophisticated financial professionals that represented all of his clients caught his scam. Crupi couldn’t comprehend why anyone would expect a person of her relatively low stature and sophistication to know what was going on. She was guilty of placing her trust in the wrong people, she said, but not of knowingly participating in a fraud.

Since I served multiple decades in prison, I frequently interacted with people who were convicted of crimes related to their business careers. Many described themselves as being naïve in matters of business law, lacking any intention to participate in fraud or deception.

When I listened to those stories, it was easier for me to give defendants the benefit of the doubt. I had experienced our nation’s commitment to mass incarceration. We operated the world’s largest prison system, and prosecutors would go to any length to obtain convictions, even at the expense of justice.

I always advised individuals from the business community who experienced the criminal justice system to write their stories. If it were true that Crupi didn’t knowingly participate in the worst fraud of all time, but only carried out orders of her superiors at work, then other career-oriented people could learn from her experience.

With a 72-month sentence to serve, Crupi will have time. Writing in prison could prove therapeutic. And if she can provide insight into how Madoff duped her as he did thousands of others, she could make a contribution to society. Indeed, her experience could bring value to career-oriented people who face terms of imprisonment because of ignorance rather than because of an intention to defraud.

But then again, it’s also possible that she knew about the fraud. I’ll wait for the next installment, which will come through letters she writes me from prison. I share what I learn and you can decide.

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NOW WATCH: This is what separates the Excel masters from the wannabes

Bernie Madoff will go down in history as the architect of America's biggest Ponzi scheme, and it turns out his vaunted position provides a great vantage point from which to view the investment world as a whole. In an interview with MarketWatch, he shares some interesting and empowering bits of wisdom for the rest of us.

Here's a look at what this legendary criminal has to say about successful investing.

If you don't know what to do, use index funds

"The best chance for the average investor is to put money in an index fund. There are lower commission rates and more professional management... it's the safest and least likely place to get scammed."

Madoff underscores one of those old yarns of general investing advice: For best results, don't go with fancy mutual funds or high-fee managed accounts. Expensive funds raise the bar for outperformance and eat away at your returns over time. Even that extra 0.5% per year can destroy wealth over the decades -- and in years when markets and your funds are down, high fees only compound the problem.

Index funds, on the other hand, are cheap, simple, and very difficult to manipulate.

At the same time, don't underestimate your own intelligence

"Wall Street is not that complicated... If you don't understand the investment, don't put your money there."

Madoff explains that despite his caginess about his investment strategy, people still wanted to entrust him with their money. He almost seems baffled by this, saying that his investors were sophisticated people overall. In reality, nothing is so complex that it defies understanding. This is investing, not quantum physics. So, if it doesn't make sense, don't put your money in. Which leads to his next point:

"If it sounds too good to be true, it is."

Trust your gut: Madoff was able to ride on a wave of credibility by generating consistent -- but not completely crazy -- returns for a number of years. Unfortunately, that credibility was built on a black box that no one could look into. The wise or suspicious stayed away, but the gullible (or simply hopeful) couldn't resist. It was, in the end, too good to be true.

Bolster your intelligence with research

To avoid making the mistake Madoff's clients made (or one of the many less obvious mistakes many investors make every day), it's imperative to educate yourself. Madoff says:

Read good books. You have to educate yourself on the market. People are very gullible. Scamming investors has been going on since the beginning of time, and I don't think it's going to end.

He goes on to say that, in the absence of a willingness to learn about the market, investors should at least put their money with a qualified registered advisor so that there is some accountability for the advice they receive.

In general, the more you understand about how markets and investing work, the more ability you'll have to analyze investment opportunities for yourself and take claims with grain of salt. You'll also be more likely to see through a "foolproof" investment strategy or an overly expensive product.

In all walks of life, the importance of education -- whether through books, experience, or both -- cannot be underestimated. The same holds true for investing.

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One in four financial service sector employees have signed, or have been asked to sign, confidentiality agreements that they say prevent them from blowing the whistle on illegal activity in the workplace, according to a survey released Tuesday.

The practice might not be part of Wall Street culture for long.

Earlier this year, the SEC cracked down on one company that forced employees to sign what it called "restrictive" non-disclosure agreements.  

It's part of an ongoing back-and-forth between financial services firms and the Securities and Exchange Commission, which, in the wake of scandals like Bernie Madoff's ponzi scheme, sought to better incentivize cooperation from tipsters. 

The survey, conducted by law firm Labaton Sucharow and the University of Notre Dame, highlights confidentiality agreements that may be unenforceable becoming common on Wall Street and elsewhere in the financial services sector. Their survey quizzed more than 1,200 financial services employees in the US and the UK. 

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New York Mets owners Fred Wilpon and Saul Katz reportedly had $500 million invested with Bernie Madoff that disappeared when the Ponzi scheme collapsed. In addition, the owners had taken out loans using the Madoff investments as collateral, leaving the team heavily in debt. The owners were also sued by the trustee for the Madoff victims and eventually settled the claims for $162 million. 

In his book that came out earlier this year, Mets general manager Sandy Alderson admitted that when details of the Bernie Madoff Ponzi scheme became public he realized that would have an impact on what the Mets would be able to spend on the field. The result was that the Mets' payroll went way down, from more than $140 million in 2011 to less than $95 million in 2012 and $85 million in 2014 at a time when MLB salaries were skyrocketing.

However, that trend has started to reverse with payroll above $100 million this season. Even more promising was the trade deadline. Despite concerns that the team would balk at adding payroll because of their financial situation, the team traded for Yoenis Cespedes and were willing to pay the $3.7 million remaining on his contract for this season. The Mets still have a below-average payroll, but this is a sign the team is finally getting back on its financial feet.

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HBO Films has found a cast and director for its movie about Bernie Madoff's $65 billion Ponzi scheme, according to Deadline's Nellie Andreeva.  

"Wizard of Lies," which has been in development since 2011, will star Robert De Niro as Bernie Madoff. 

He will be joined by Michelle Pfeiffer, who will play wife, Ruth Madoff, and Alessandro Nivola, who will play the role of Mark Madoff, Bernie's eldest son. 

Barry Levinson has been tapped to direct the film.

Bernie Madoff is currently serving the sixth year of his 150-year sentence.

The casting news follows the release of a trailer for hedge Fund drama, "Billions" which is co-written by Brian Koppelman, David Levien, and CNBC Squawk Box's Andrew Ross Sorkin. The series debuts January 17, 2016.

ABC has also fast tracked a miniseries called "Madoff," featuring Blythe Danner and Richard Dreyfuss as Ruth and Bernie Madoff. A release is expected early 2016.

Read the full Deadline article here.

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WASHINGTON (Reuters) - The U.S. Justice Department has issued new guidelines that emphasize prosecuting individual executives in white-collar crime cases, and not just their corporations, according to a memo the New York Times posted on its website on Wednesday.

The newspaper said the rules spelled out to federal prosecutors in the memo came in response to criticism that the Obama administration had not vigorously pursued individuals in the financial meltdown and housing crisis of 2008-2009 and in various corporate scandals.

"Corporations can only commit crimes through flesh-and-blood people," Deputy Attorney General Sally Yates, the author of the memo, told the Times. "It’s only fair that the people who are responsible for committing those crimes be held accountable. The public needs to have confidence that there is one system of justice and it applies equally regardless of whether that crime occurs on a street corner or in a boardroom."

Yates was to discuss the new policy in a speech on Thursday at the New York University Law School.

The memo said companies would not get credit for cooperating with investigators unless they identify employees responsible for crimes and turn over evidence against them. Civil and criminal attorneys both should focus on individuals from the beginning of an investigation, it added.

The memo also said cases against corporations should not be resolved unless there is a clear plan to resolve related cases against individuals.

Yates said companies would not be allowed to let low-level employees take the blame in criminal cases.

"We’re not going to be accepting a company's cooperation when they just offer up the vice president in charge of going to jail," she said.

(Writing by Bill Trott; Editing by Peter Cooney)

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(Reuters) - Fans of the New York Mets had bemoaned the negative impact of the Bernie Madoff financial scandal on the Major League Baseball team's payroll until Thursday night's series-clinching victory over the Los Angeles Dodgers.

With believers now dreaming of the team's first World Series appearance since 2000, the Mets have enjoyed a similar boost off the field with higher attendance and TV ratings. That leads analysts and bankers to believe the club could be at the start of a virtuous cycle, where winning begets higher revenue and even more winning for years to come.

Fresh off advancing to the National League Championship Series against the Chicago Cubs - another rising team with a compelling hard-luck history - the Mets have combined low-cost, young talent with the amenities of a relatively new home park, Citi Field, which opened in 2009.

The best-of-seven Mets-Cubs series begins on Saturday.

"The stadium, combined with aggressive marketing, combined with youth/hope are a great triple play," said Rick Horrow, sports lecturer at Harvard Law School.

That optimism seemed far away when owners Fred Wilpon and Saul Katz were caught up in Madoff's Ponzi scheme, which was uncovered in late 2008 and cost investors $17 billion in principal. While Wilpon denied it, analysts and bankers said the scandal certainly led to the team's lower payrolls.

The Mets in 2009 had the second-highest payroll in baseball at $142.2 million, but that fell to 21st last year at $84 million, according to Baseball Prospectus. This year it has risen to $101.3 million, which still ranks as 21st.

In 2010, the trustee in charge of recovering money for Madoff victims filed a $1 billion lawsuit against Wilpon, Katz and more than 100 other defendants, claiming they turned a blind eye to the fraud; a charge they denied. The figure was later limited to $386 million by a federal judge.

Wilpon and Katz settled that lawsuit in 2012 by agreeing to give up their claims to all but $16 million of the $178 million they lost in the Madoff fraud, though it is unlikely they will recover any funds.

In addition, the settlement calls for Wilpon and Katz to pay as much as $29 million over the next two years to help repay other Madoff customers who lost money in the scheme.

But the team and its finances are now on an upward trajectory.

“We were trending upward before the start of the season,” Mets chief revenue officer Lou DePaoli said, citing ticket sales and sponsorship deals. “Both have accelerated, particularly over the past two months ... and we are already in the process of working to grow all these elements for 2016.” 

YOUTH-DRIVEN REBOUND

The Mets have racked up wins on the field relying on young, inexpensive star pitchers like Jacob deGrom and Noah Syndergaard, which allowed the team to also add Cuban slugger Yoenis Cespedes in July.

This week's playoff run glued some of the biggest names on Wall Street and finance to their TVs, laptops or smartphones for Thursday night's clinching divisional series win against the Dodgers.

Devin Wenig, CEO of eBay Inc , attended last weekend’s games in Los Angeles. "As a displaced New Yorker, I have carried my love of the Mets to Silicon Valley," he told Reuters. "There is a sense of renewal for a franchise long overdue for its moment in the spotlight."

Mohamed El-Erian, the chief economic adviser for financial services company Allianz SE and self-described "long-suffering fan," posted a congratulatory tweet. "@Mets-@Cubs!! Should be a great #NLCS. Congratulations #Mets, and #LetsGoMets!"

The team's winning this year has helped boost attendance and TV ratings, which translates to higher revenue, pushing the value of the franchise higher. Forbes magazine valued the team at $1.35 billion in March, the seventh-highest valuation in the sport and up 69 percent from the year before. Only three other teams had higher estimated growth.

Mets attendance totaled 2,569,753 people this season, an increase of 18 percent from last year. However, that still lags the more than 3.1 million the team drew in Citi Field's first year in 2009 and analysts said there is no excuse for a New York team not to draw at least 3 million fans.

"When you have teams like the Mets ... that have struggled for a few years, when the team starts to perform well it is really heartening for our business to see the fans flock back," MLB Commissioner Rob Manfred told Reuters. 

REVENUE SWEET SPOT

While ticket prices at Citi Field rank only 18th in the 30-team league at an average of $25 apiece according to Team Marketing Report, there is risk with raising prices too fast and then having a possibly mediocre 2016, said Robert Tilliss, chief executive of sports banker Inner Circle Sports.

"You've generated a little bit more revenue in that case, but now you've agitated your fan base. It's definitely a delicate balance," he said.

One element in the team's favor is a wealthy fan base that has been waiting for a winner to return, which suggests huge upside for team revenue.

"It's kind of like cicadas," said Marc Ganis, president of consulting firm Sportscorp Ltd. "They stay dormant under the ground, but my goodness when they come out seven years later, they come out in force and are as loud as can be."

That is reflected in higher merchandise sales - almost double last year's levels compared with industry average growth of 5-6 percent.

Mets viewer ratings also spiked 68 percent this year on SportsNet New York, the regional sports TV network the team partly owns, and that translates to higher ad rates, analysts and bankers said. It was the most-watched season since 2010.

Meanwhile, Madoff, 77, the man blamed by many for the Mets' years of losing, is serving his 150-year prison term after pleading guilty in 2009 to masterminding the scheme. Listed under the register number 61727-054, he is not set to be released until Nov. 14, 2139, according to the Federal Bureau of Prisons website.

Madoff could not be reached for comment from the Federal Correctional Complex in Butner, North Carolina, where he is being held. But there is plenty of reason for him, along with Mets fans everywhere, to have hopes for better days ahead for the team.

(Reporting by Ben Klayman in Detroit; Additional reporting by Jennifer Ablan, Joseph Ax and Larry Fine in New York and Steve Ginsburg in Washington; Editing by Edward Tobin and Matthew Lewis)

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