Federal prosecutors say Bernie Madoff was in 'love triangle' with employee

By Nate Raymond

NEW YORK (Reuters) - Bernard Madoff was in a "love triangle" involving one of five former employees who are about to go on trial for helping him run his multibillion-dollar Ponzi scheme, prosecutors said.

Madoff pleaded guilty in March 2009 to running a fraud of up to $65 billion at his investment firm and is serving a 150-year prison sentence.

While Madoff said he acted alone, prosecutors have since charged 13 individuals in connection with the fraud. Five of them - two women and three men - are set to go on trial in federal court in New York on October 7.

In a filing with the court on Thursday, prosecutors said the married Madoff was involved with one of the five but did not give a name.

All but one of the defendants were at one time involved in relationships with each other, and one had a relationship with Madoff, the prosecutors said.

"For example, one of the defendants was in a love triangle with Bernard Madoff himself," prosecutors said.

In the filing, the office of Preet Bharara, the U.S. attorney for Manhattan, said prosecutors had gathered "inflammatory" evidence of romantic and sexual relationships between employees and customers, including between defendants and witnesses in the upcoming trial.

If the judge finds evidence of past relationships are admissible, defendants and witnesses should be prepared for details to be elicited during the government's case, the motion said.

A former lawyer for Madoff declined to comment.

Eric Breslin, a lawyer for former investment advisory employee Joann Crupi, said he didn't know which defendant was in the purported "love triangle."

"It's just kind of strange," Breslin said of the filing.

Besides Crupi, the defendants include former operations manager Daniel Bonventre, former investment advisory employee Annette Bongiorno, and former computer programmers Jerome O'Hara and George Perez.

Lawyers for the other defendants either did not respond to requests for comment or declined to comment. A spokeswoman for Bharara did not immediately respond to a request for comment.

At a hearing on Friday, Judge Laura Taylor Swain denied a request by lawyers for the five former employees to delay the trial for two months because of a new indictment filed by prosecutors last week.

The case is USA v. O'Hara et al, U.S. District Court for the Southern District of New York, No. 10-0228.

(Reporting by Nate Raymond; Editing by Kenneth Barry)

[Image: Bernard Madoff (R), who confessed to defrauding investors of 50 billion dollars, arrives home after a hearing at Federal Court, in New York, Jan. 5, 2009. By Chip East for Reuters.]