Mr. Madoff coped with the flood of new accounts by using computer programs “written, maintained and updated” by the defendants.
Those programs allowed Mr. Madoff to mimic a legitimate investment advisory business — although prosecutors contend the two programmers knew no actual trades were ever being made.
The programmers are accused of designing the software that generated thousands of fake customer account statements as well as fraudulent trading confirmations from the London Stock Exchange and fictitious clearinghouse records showing transactions that had never occurred.
These days, any operation of scale requires systems, so the days when you could perpetrate a massive scam just using laborers, such as shipping actual bricks instead of hard drives, are over. Advances in regulation and auditing of systems also means taking advantage of software errors, such as making millions with false trades, are also over.
So, now it comes down to programmers being in on the game.
Mr. Madoff averted [the programmers'] rebellion by ordering Mr. DiPascali to give them whatever was required to keep them quiet. The two men received 25 percent pay increases and bonuses of about $60,000 -- and maintained their silence, according to the complaints.
We can surely expect to see increasing numbers of cases where people will lean on software developers, who know the back-doors into their systems, to help out their crime. Often, these will be very senior people. With lots of money to share, in addition to being able to ruin careers.
I don't know what 25% of their pay adds up to, but I'm sure all of it and more will be going to lawyers as they attempt to avoid 30 years in jail.
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