Bernard Madoff
Bernard Madoff. (Reuters)

Bernard Madoff who was convicted in connection with a multibillion-dollar Ponzi scheme had spied on two US Securities and Exchange Commission investigators assigned to probe his firm, according to a courtroom testimony.

Former Madoff chief financial officer Frank DiPascali, who admitted fraud and became the star government witness in the trial of five former Madoff employees, told a US federal jury that his former boss sneaked a look into the briefcase of one of the investigators in 2005, with the help of the employees who are on trial.

DiPascali added that Madoff also placed the investigators in a glass-walled office for a week in order to spy on them.

Madoff found a news article in the briefcase, which made him furious, according to the testimony. The 2001 article from Barron's magazine was questioning the unbelievable growth of Madoff's investment advisory business, which later became the source of the notorious $65bn (€47bn, £40bn) fraud.

The probe put the entire firm into panic mode, and DiPascali personally had a conversation with two of the employees on trial about spying on the office being used by the investigators, he said in the court.

"We discussed the possibility of purchasing equipment that would bug the room they were using, so we could learn the scope of what they were doing," DiPascali said.

However, they could not do so, but they did attempt to spy on emails from office servers that would be of high importance for the SEC, according to the testimony.

Arrests and Trial

After the fraud was uncovered, Madoff was arrested on 12 December, 2008, for his Ponzi scheme valued at $64.8bn. He pleaded guilty later and was sentenced to a 150-year prison term.

The fraud has resulted in estimated losses of about $17.3bn for investors.

The five former Madoff employees who face criminal charges related to Madoff's worldwide investment fraud are Annette Bongiorno, Daniel Bonventre, Joann Crupi, Jerome O'Hara and George Perez, who all pleaded not guilty. The trial on them opened on 16 October in US District Court in Manhattan.

Bernard's brother Peter Madoff also pleaded guilty in the case and was sentenced to 10 years in prison. Others admitting to charges include former accountant David Friehling, who is cooperating with prosecutors.