Five former employees of Bernard L. Madoff on trial for allegedly aiding his $17 billion Ponzi scheme were kept in the dark about the fraud and duped by his outsized personality and reputation, a jury was told.

The group’s lawyers took turns giving opening statements in federal court in New York yesterday, saying their clients failed to recognize the carefully crafted fraud because they either idolized Madoff for decades or didn’t have the skills.

Joann Crupi, who joined Madoff’s firm straight out of college in 1983 and managed large accounts, never “pulled back the curtain on the Great Oz,” her lawyer Eric Breslin said. Madoff’s employees viewed him as “almost a god” and Crupi, like everyone else, was duped into helping him, he said.

Crupi and her former colleagues seek to convince the jury they are just five more victims of Madoff and had no idea the investment company was a fraud until their boss’s arrest on Dec. 11, 2008. Each defense lawyer said the government’s witnesses are testifying against the group in a desperate bid to get reduced sentences and shouldn’t be trusted.

Frank DiPascali, Madoff’s finance chief, pleaded guilty in 2009 and agreed to assist in the criminal case, as have about half a dozen other former Madoff workers. He hasn’t been sentenced yet.

Breslin compared DiPascali and the other witnesses to “drowning men and women” willing to push the people around them under water to stay afloat. “They’re trying to save themselves by punishing other people,” he said.

Computer Programmers

The other defendants are Annette Bongiorno, a Madoff employee for 40 years who went from being his personal secretary to helping run the company’s investment advisory business; Daniel Bonventre, 66, the operations chief who signed checks for Madoff’s securities firm and worked with its general ledger; and computer programmers Jerome O’Hara and George Perez, whose expertise was used to generate millions of corporate documents for customers and regulators.

The five former employees were lulled into a false sense of security by regulatory audits that never revealed problems, and the fact that financially savvy billionaires placed their money in Madoff’s hands, their lawyers said.

U.S. District Judge Laura Taylor Swain said yesterday that the trial won’t take place on Fridays and will resume on Monday. She has estimated the trial may last as long as five months, including a weeklong jury selection process that ended Oct. 15.

Fake Profit

The U.S. alleges the group on trial knew Madoff’s securities firm didn’t conduct real trades and used money from earlier investors to pay off new ones. When the fraud collapsed almost five years ago, thousands of customers lost at least $17 billion in principal and $48 billion in fake profit they believed was being held in their accounts.

The defendants created millions of false account statements and elaborate trading records to mislead anyone who came in contact with the company, and became rich in the process, Assistant U.S. Attorney Matthew Schwartz told jurors Oct. 16 in the courtroom not far from Wall Street, where Madoff’s company was once based in the 1970s.

“They enabled the fraud in different but essential ways,” Schwartz told the 12-person jury. “They did it for the most simple reason of all -- greed.”

Bonventre was fooled by Madoff’s “depraved and pathological lies,” Andrew Frisch, his lawyer, said yesterday. “Dan did what Madoff told him to do. That’s what the evidence will show. Dan believed Madoff like so many others.”

Legitimate Unit

Bonventre, who started working for Madoff in the 1960s when he was 22, was part of the firm’s legitimate broker-dealer unit and didn’t know about the fraud at the investment advisory business, Frisch said.

Bonventre “never lied, never shredded documents, never ran and hid” after Madoff’s arrest in 2008, Frisch said. “He had no reason to. He didn’t know about the Ponzi scheme.”

In his guilty plea in 2009, Madoff said the market-making and proprietary trading side of his firm was “legitimate” while admitting he ran the scheme from the advisory business, Bernard L. Madoff Investment Securities LLC.

Bongiorno started working for the company straight out of high school and never learned how a securities company was supposed to operate, her lawyer, Roland Riopelle, said in his opening statement.

Bongiorno “never understood that she was involved in a fraud,” Riopelle.

Party Photo

He showed the jury a photograph of his client when she was 19 years old, standing with other Madoff employees in the 1960s at a party and smiling widely. Another photo displayed on jurors’ flat-screen monitors featured Madoff in a plaid shirt on horseback in 1988. Riopelle said his client kept that image for a decade.

“She looked up to Mr. Madoff. She believed in Mr. Madoff. She saw him as a kind of hero,” he said. “While he wasn’t quite her knight in shining armor, he was her knight in plaid.”

Schwartz told the jury that O’Hara and Perez in 2006 confronted Madoff and sought to extort more pay out of him after they realized their programming codes -- which allowed the firm’s computers to “spit out fake paperwork” -- were essential to keeping the fraud going. Madoff gave the men $100,000 each as “hush money” and let them name their own annual bonuses and salary increases, the prosecutor said.

O’Hara’s lawyer, Gordon Mehler, yesterday told the jury there was no extortion and that O’Hara and Perez had a “courageous confrontation” with Madoff after becoming uncomfortable with some of the code they were working on. They expected to be fired and were “relieved” when Madoff accepted their concerns, Mehler said.

‘Never a Crook’

“O’Hara was never a crook,” Mehler said.

Perez’s lawyer, Larry Krantz, said the computer programmers became uncomfortable with the codes they were being asked to write because they feared they could be misused. He had no idea the codes were being used for deception and Madoff -- a “financial god” -- never told them, Krantz said.

“He couldn’t have been told these things because these things were deep, dark secrets,” Krantz said. Those secrets were only told to Madoff’s “inner circle” and the “tech guys” weren’t in that group, he said.

Each of the lawyers said in different ways that Madoff compartmentalized the company’s inner workings to prevent others from seeing the big picture, and frequently hired people who were young an inexperienced so they learned only from him.

“In order for the fraud to work, Mr. Madoff had to first control his own people,” Breslin said. Madoff “was an utter genius at manipulating people.”

‘Absurd’ Claims

Jerry Reisman, a lawyer representing 35 victims of Madoff in litigation over the fraud, said yesterday in an e-mail any claim that the defendants were duped by Madoff is “absurd.”

“They were not only complicit, but their actions enabled Madoff to continue his deceitful operation,” Reisman, whose clients lost $125 million, said. “Their ongoing efforts to aid Bernie Madoff made them his partners, not just his workers.”

The opening statement from Schwartz hinted at the evidence the U.S. will present, including allegations the ex-employees “obsessed” over the details of fake documents they created to make them look real, including long discussions over what fonts and paper to use and where to place asterisks.

Schwartz told the jury they would see extensive evidence against the defendants, including Bongiorno’s “meticulous records of her involvement in the fraud” and details of Crupi’s management of the “slush fund” into which all customers’ money was deposited instead of being invested into securities.

‘Fancy Cigars’

Prosecutors will also show Bonventre used money stolen from Madoff’s customers to pay for his vacations and country club dues, finance his child’s private-school education, help buy a “fancy Upper East Side apartment” for himself and “fancy cigars,” Schwartz told the jury.

The fraud started in the early 1970s and evolved into an “elaborate fiction” that was “surprisingly simple” and made each of the defendants rich, Schwartz told the jury.

Testimony from Madoff’s accomplices who pleaded guilty will be central to the government’s case against the five people, including statement from DiPascali and David Friehling, an accountant for Madoff, who pleaded guilty to helping prepare phony tax returns and is cooperating with prosecutors.

Madoff, 75, admitted to federal agents in December 2008 that his company was a sham. He pleaded guilty to 11 counts and was sentenced to 150 years in prison, though he claimed all along that he worked alone and refused to implicate anyone else.

Federal authorities also obtained guilty pleas from Peter Madoff, who helped his brother run the firm for four decades, and employees Craig Kugel, David Kugel, Enrica Cotellessa-Pitz, Irwin Lipkin and Eric Lipkin.

Peter Madoff was sentenced to 10 years in prison. The other defendants haven’t been sentenced.