Two longtime back office employees of Bernard Madoff were arrested Thursday on charges that they helped the disgraced financier dupe investors for decades by making fictitious investments — and that they cashed in on the epic Ponzi scheme themselves.

FBI agents arrested Joann Crupi at her house in Westfield, N.J., while Annette Bongiorno was picked up at her home in Boca Raton, Fla.

An indictment unsealed in federal court in Manhattan alleges Crupi, 49, and Bongiorno, 62, "'executed' trades in the accounts of (wealthy clients) only on paper ... and that achieved annual rates of return that had been predetermined by Madoff."

Prosecutors, citing internal communications, say Bongiorno used a computer program designed to backdate trades and manipulate account statements.

"I need the ability to give any settlement date I want," she wrote to a manager in the early 1990s, according to the indictment.

Crupi was charged with creating false records to cover Madoff's tracks amid reviews by the Securities and Exchange Commission. Prosecutors say that as the scheme unraveled, she "became aware that client redemption requests bore no relationship to (the business') cash on hand, which by late 2008 was woefully insufficient to meet those requests," the indictment said.

Seized records show that Bongiorno deposited about $920,000 in her own Madoff account from 1975 to 2008 and withdrew more than $14 million over the same period, the indictment said. Crupi received hundreds of thousands of dollars in "off the books" income, it added.

The women "protected and perpetuated the Madoff mirage while putting very real money in their own pockets," U.S. Attorney Preet Bharara said in a statement.

Both are charged with conspiracy, securities fraud and falsifying records.

Crupi was due in Manhattan court Thursday. Her attorney did not immediately respond to comment requests.

Bongiorno appeared in court in West Palm Beach, Fla. A bail hearing was scheduled for Monday, meaning Bongiorno will spend at least the weekend in jail.

She was asked by U.S. Magistrate Judge Ann Vitunac if she understood the charges.

"I understand most of it," she replied. "I don't understand all of it."

Authorities filed civil papers in June seeking to recoup $5 million from the two employees. The government said in August that it had traced houses in Manhasset, N.Y., and Boca Raton, Fla., and other assets to Bongiorno.

Bongiorno's attorney, Nina Mandel, asked if property that had government liens on it could be used toward the bond requirement. Vitunac said it could not, leading Mandel to note that Madoff had been allowed to use such property to post bond.

"I don't have him before me," Vitunac replied.

Mandel rubbed Bongiorno's back during the short proceeding. The defendant wore khakis, a black shirt and flip-flops, and was shackled at the wrists and ankles.

"Now that Annette has been formally charged, we look forward to demonstrating that she is not guilty of these allegations," another attorney for Bongiorno, Maurice Sercarz, said in an e-mail to The Associated Press.

Madoff is serving a 150-year sentence in federal prison after admitting that he operated his fraud for at least two decades, cheating thousands of individuals, charities, celebrities and institutional investors. Losses are estimated at around $20 billion, making it the biggest investment fraud in U.S. history.

Both Crupi and Bongiorno face up to 20 years in prison if convicted of the most serious charges.


Associated Press Writer Matt Sedensky in West Palm Beach, Fla., contributed to this report.