Two former back office assistants of Bernard Madoff were arrested Thursday, after the Securities and Exchange Commission Thursday charged the employees with helping to create phony account statements for his multibillion dollar fraud.

Annette Bongiorno, 62, a long-time administrative assistant, was arrested at her home in Boca Raton, Florida. Joann Crupi, 49, was arrested at her home in Westfield, New Jersey.

The federal regulator, in complaints filed in U.S. District Court in New York, said that Bongiorno created false books and records to abet the Ponzi scheme; and that Crupi helped decide which accounts to cash out when the fraud was on the verge of collapsing.

The SEC suits and arrests come 13 months after allegations were filed by investor Jay Wexler against Bongiorno and her staff. As reported last December by Securities Technology Monitor ("How Bernie Made Basket Cases of His Customers' Accounts"), the Oct. 20, 2009, suit filed by Wexler accused Bongiorno with, among other things, researching stock and options data in order to generate "tickets showing fictitious trades."

The SEC Said Bongiorno misled investors in telephone conversations and through account statements and trade confirmations that "reported securities transactions that never happened and positions that never existed."

Bongiorno also created false trades in her own accounts at Bernard L. Madoff Investment Securities that enabled her to cash out millions of dollars more than she deposited.

From 1975 through December 2008, Bongiorno deposited approximately $920,000 into her accounts, but withdrew $14.5 million, the SEC said. Bongiorno also received salary and bonuses ranging from $200,000 a year between 1995 and 2006 to $623,000 in 2007.

The SEC said Crupi, who worked for Madoff from July 1983 until December 2008, was responsible for supervising the primary bank account used in BMIS's investment advisory operations.

When the fraud was on the verge of collapse, Crupi helped decide which accounts should be cashed out and prepared checks for those selected investors, many of them who were friends or family of Madoff. Crupi prepared checks worth $350 million "for these selected investors from the Main Ponzi Scheme Account,,'' the SEC said, while other investors were ignored.

"Bongiorno and Crupi helped create an elaborate edifice of fake accounts, fake trades, and fake profits," said George S. Canellos, Director of the SEC's New York Regional Office, in a statement. "Without their active and ongoing assistance, Madoff's world of lies would have been unsustainable."

According to the SEC's complaint against Bongiorno filed in U.S. District Court for the Southern District of New York, Bongiorno created trades that were chosen with the benefit of hindsight to generate large "gains" in BMIS accounts. The trades and positions reported in investor accounts, however, were fictional.

Crupi, hired in 1983 as a keypunch operator, had control over two important aspects of the BMIS fraud, the SEC alleged: handlign the primary bank account used in the Ponzi scheme and creating false trading portfolios and account statements purportedly used in a hedging strategy.

Among other things, the SEC's complaints seek financial penalties and court orders requiring Bongiorno and Crupi to disgorge their gains.