Two Programmers Charged in Helping Bernard Madoff 'Cook the Books'

Via The Register UK -

A federal grand jury has indicted two computer programmers on fraud and conspiracy charges for developing programs used by Bernard Madoff to cook the books in his billion-dollar ponzi scheme.

Jerome O'Hara and George Perez knowingly created the programs that removed or altered key data contained in reports submitted to regulators in the United States and Europe, according to the indictment filed Wednesday in US District Court in Manhattan. Among other things, their code contained algorithms to randomly generate times for purported orders that in fact were never made.

The reports were generated on "House 17," an IBM AS/400 server kept on the 17th floor of Madoff's offices that had no link to the outside world, prosecutors allege. To ensure the reports appeared genuine, the server pulled partial information from a separate AS/400 that was linked to the Depository Trust Company and other third parties.

"The books and records generated by the House 17 programs for [Madoff's] business were entirely false and fraudulent because, among other things, they purported to reflect securities transactions that, in fact, had never been executed," prosecutors allege in the indictment.

The document goes on to claim that the programmers knew their programs were being used to falsify information being provided to the Securities and Exchange Commission and the European Accounting Firm, and sought to profit from their expertise. In 2006, O'Hara and Perez cashed Madoff checks worth $976,000 and $289,000 respectively.

That same year, the pair threatened to leave their jobs unless they received raises of 20 per cent. Madoff not only met their demands, he also gave them raises of $64,812 and $60,165.