Joanne Crupi was arrested at her Westfield, New Jersey, home, while Annette Bongiorno was arrested at her home in Boca Raton, Florida.
The 61-year-old Bongiorno worked for Madoff for more than 40 years as as a secretary and back office staff supervisor. Federal prosecutors already moved to seize her $1.2 million Boca Raton mansion.
Crupi was also a longtime Madoff employee. Federal prosecutors seized her $2.25 million house in Mantoloking, on the Jersey Shore.
The arrests are the fourth and fifth criminal actions in the Madoff case, but they are the first charges to emerge from the cooperation of Madoff's former finance chief, Frank DiPascali Jr., who agreed to plead guilty as part of a cooperation arragement.
Bongiorno and Crupi worked for DiPascali at the Madoff firm. They are facing charges that they helped the disgraced financier dupe investors for decades by making fictitious investments. They're also accused of cashing in on the epic Ponzi scheme themselves.
Both women worked at the firm for more than 25 years. Bongiorno was Madoff's longtime personal secretary. Crupi, among other responsibilities, handled his daily cash balances.
"Now that Annette has been formally charged, we look forward to demonstrating that she is not guilty of these allegations," Bongiorno's attorney, Maurice Sercarz, said in an e-mail to The Associated Press.
Crupi's attorney did not immediately return phone and e-mail messages seeking comment.
Federal prosecutors earlier this year had filed civil complaints against the two women, seeking the return of at least $5 million of their assets allegedly traced to the Madoff fraud.
Crupi and Bongiorno bought luxury cars and invested in property with funds obtained from defrauded Madoff investors. Those assets included a 2005 Bentley Continental and a 2007 Mercedes Benz owned by Bongiorno, and the Mantoloking beach house owned by Crupi that she bought with $2.25 million in cash.
Both are charged with conspiracy, securities fraud and falsifying records. Both face up to 20 years in prison if convicted of the most serious charges.
Madoff is serving a 150-year sentence in federal prison after admitting that he operated his fraud for at least two decades, cheating thousands of individuals, charities, celebrities and institutional investors. Losses are estimated at around $20 billion, making it the biggest investment fraud in U.S. history.