The programmers, Jerome O'Hara and George Perez , allegedly took "hush money" in exchange for helping Madoff produce false documents and trading records over a period of 15 years, according to the Securities and Exchange Commission.
"Without the help of O'Hara and Perez, the Madoff fraud would not have been possible," George Canellos, director of the SEC's New York Regional Office, said in a statement.
"They used their special computer skills to create sophisticated, credible and entirely phony trading records that were critical to the success of Madoff's scheme for so many years," Canellos said.
According to the SEC's complaint, O'Hara and Perez helped cook Madoff's books by combining actual positions and activity in the firm's trading business with fake balances held in investor accounts. They allegedly wrote programs that generated "many thousands" of phony documents to substantiate nonexistent trading.
Madoff: Lifestyles of the rich and infamousIn 2006, the pair had a "crisis of conscience" and attempted to end their involvement in the scheme by deleting nearly all of the 225 illicit programs they had written. But they did not delete the monthly backup tapes.
After the botched attempt at covering their tracks, O'Hara and Perez cashed out "hundreds of thousands of dollars" each from their personal accounts before confronting Madoff and refusing to aid the fraud, the SEC said.
"I won't lie any longer," one of them told Madoff, according to O'Hara's handwritten notes from the encounter.
In response, the SEC said Madoff offered O'Hara and Perez "as much money as necessary to keep quiet." That turned out to be a 25% raise and a one-time bonus of more than $60,000 each. A larger sum would have attracted too much attention, the programmers said.
Madoff, 71, pleaded guilty in March to 11 federal counts related to his operation of a massive, long-running Ponzi scheme, masquerading his investment firm as legitimate when it was nothing more than a front. He was sentenced to 150 years in prison on June 29.
During the decades-long scheme, Madoff would use the funds from new investors to send payments to his more mature investors. He would falsely portray these payments as proceeds from investments, when they were actually stolen money.
Earlier this month, Madoff's longtime accountant, David G. Friehling, pleaded guilty to multiple fraud charges related to the scheme.
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