Did Madoff keep employees in dark about fraud?

Bernard Madoff was a Wall Street rock star who charmed billionaires, celebrities, government regulators and his employees, including five of his ex-workers who are on trial for fraud, defense attorneys told a jury in opening statements this week.

Attorney Andrew James Frisch said Madoff and his former finance chief government cooperator Frank DiPascali were "depraved and pathological" as they delivered millions of lies to disguise a fraud that cheated thousands of investors out of billions of dollars.

On Wednesday, a prosecutor accused the five former employees of being crucial components of a fraud that remained hidden for decades, but defence lawyers on Thursday insisted their clients were fooled in the same way that Securities and Exchange Commission inspectors and sophisticated financial experts were.

Frisch portrayed his client, Daniel Bonventre, as enamored by Madoff. Bonventre, 66, rose to a position of director of operations after joining the firm in the late 1960s. He oversaw the legitimate side of Madoff's business, not the secretive private investment wing, Frisch said.

"Dan believed Madoff, like so many others," Frisch said. "He devoted his life to Madoff. ... Dan is broken but he is not guilty."

Roland Riopelle, attorney for Madoff's longtime secretary, Annette Bongiorno, said his client too was taken in by "a kind of rock star in the securities industry."

"The government simply cannot prove that she knew there was a fraud and intended to hurt anyone," he said.

Bongiorno started working for Madoff in the 1960s when she was 19 and eventually became a supervisor, responsible for maintaining the accounts of longtime customers, Riopelle said.

He noted that she kept her money in the company's accounts until the fraud was revealed and had encouraged her family and friends to invest as well, something she would not do if she was "really some kind of monster."

Frisch described Madoff as someone as a "Wall Street icon," someone as large in stature in the securities industry as Donald Trump in business, LeBron James in basketball or Oprah Winfrey on television. He said Madoff's clients included filmmaker Steven Spielberg and actors Kevin Bacon and John Malkovich.

Frisch and Riopelle insisted their clients had no chance.

"She knew many of Madoff's customers were billionaires and they knew more about the markets than she did," Riopelle said.

Others on trial include JoAnn Crupi, an account manager; and computer programmers Jerome O'Hara and George Perez. They too have pleaded not guilty.

On Wednesday, Assistant U.S. Attorney Matthew Schwartz said no one would dispute Madoff told many lies.

"But the evidence will show that these defendants knew exactly what they were doing. ... They did it because Bernard Madoff encouraged it and they were getting rich in the process," he said.

The trial follows the 2008 collapse of Madoff's private investment business, which cost clients nearly $US20 billion. A court-appointed trustee has recovered much of the money by forcing those customers who received big payouts from Madoff to return the funds.

When the fraud was revealed, Madoff admitted that the nearly $68 billion he claimed existed in accounts was actually only several hundred million dollars.

The Ponzi scheme nearly ran out of money at least twice before finally collapsing during the 2008 financial crisis. At the time, investors were seeking to divest $1.4 billion when the firm only had $300 million left, the prosecutor said.

Madoff, 75, is serving a 150-year prison sentence.