Two computer programmers provided technical support to falsify documents and trading records for swindler Bernard Madoff and took hush money to help keep the massive fraud going, U.S. authorities said.

The FBI arrested Jerome O'Hara, 46, and George Perez, 43, at their homes on Friday morning on criminal charges of conspiracy for falsifying books and records at both the broker-dealer and investment arms of Bernard L. Madoff Investment Securities LLC in New York.

The computer codes and random algorithms they allegedly designed served to deceive investors and regulators and concealed Madoff's crimes, said federal prosecutor Preet Bharara. They have been charged for their roles in Madoff's epic fraud, and the investigation remains ongoing.

Madoff was sentenced to 150 years in prison on June 29. The next day, law enforcement sources said the FBI expected as many as 10 people could be criminally charged for their roles in the decades-long fraud of as much as $65 billion.

Thousands of investors around the world were bilked in Wall Street's biggest investment fraud, a Ponzi scheme in which early investors were paid with the money of new clients.

O'Hara starting working for Madoff in 1990 and Perez in 1991. They were still working for him when the once-respected financier was arrested on December 11, 2008.

Lawyers for O'Hara and Perez could not immediately be reached for comment.

'HOUSE 17' SERVER

The criminal complaint said that in April 2006, O'Hara and Perez attempted to delete 218 of 225 special computer programs run on an IBM server known in the Madoff firm as House 17.

In August or September 2006, they met with Madoff and told him they would no longer lie for him, a statement by the FBI and the prosecutor said.

The FBI found handwritten notes in O'Hara's desk. I won't lie any longer. Next time, I say 'ask Frank' said one note, according to the FBI, a reference to Madoff's long-time deputy, Frank DiPascali.

Madoff told DiPascali to pay the programmers whatever they wanted in order to keep them happy, the investigators said, and the programmers received pay increases of about 25 percent and net bonuses of about $60,000.

Madoff, DiPascali and the firm's outside accountant, David Friehling, have all pleaded guilty to criminal charges.

O'Hara was arrested at his home in Malverne, New York, and Perez was arrested at home in East Brunswick, New Jersey. Their arrests bring to five the number of people who have been criminally charged in the case.

The charges against the pair carry maximum prison sentences of 30 years and millions of dollars in fines.

The two men were also served with civil charges by the U.S. Securities and Exchange Commission. O'Hara and Perez were accused of knowing that the computer programs they developed in 2003 and 2004 contained fraudulent information used in U.S. and European regulatory reviews.

The SEC and a European accounting firm reviewed Madoff's operations at least five times between 2004 and 2008, the government said. The SEC has been criticized by legislators and investors for not catching Madoff. The news of the fraud shook investor confidence in regulators and the market.

(Reporting by Grant McCool, Rachelle Younglai; editing by John Wallace)

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