Bernard Madoff’s broker-dealer and proprietary trading units were backed by “hundreds of millions of dollars” in stolen money from his fraudulent investment advisory business, a jury was told in the trial of five former employees accused of aiding the $17 billion Ponzi scheme, Bloomberg News reported yesterday. Madoff funneled money intended for customer investments through his London-based operation and through external U.S. brokerage accounts so it could be used for rent, payroll and credit card payments at his businesses where real trading took place, Bruce Dubinsky, a government witness who analyzed the fraud in 2011, testified today in federal court in Manhattan. One of the defendants, Daniel Bonventre, who oversaw the broker-dealer and proprietary trading operations, argues that he wasn’t aware of the fraud because Madoff lied to him, and because he didn’t work in the investment advisory unit. The U.S. alleges Bonventre knew his business benefited from fraud.
