Madoff’s Accountant Pleads Guilty, Faces Maximum 114 Years in Prison
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November 7, 2009
A Department of Justice Press Release earlier this week announced that David G. Friehling, accountant for Bernard L. Madoff Investment Securities, LLC, plead guilty in Manhattan Federal Court to nine counts including securities fraud, investment adviser fraud, four counts of filing false audit reports with the United States Securities and Exchange Commission ("SEC") and three counts of obstructing or impeding the administration of the internal revenue laws. In addition to pleading guilty, Friehling has agreed to cooperate with the Government in its ongoing investigation of Bernard Madoff's fraud.
United States Attorney Preet Bharara said, "David Friehling was one of the key enablers of Bernard Madoff's historic fraud. With his guilty plea, Friehling has taken responsibility for his crimes and will now assist us in holding others accountable for their involvement in Madoff's epic fraud against so many victims."
Friehling, 49, acted as the independent auditor of the Madoff firm from 1991 until December 2008, when the fraud collapsed. He produced the firm’s certified and purportedly audited financial statements, including balance sheets, statements of income, statements of cash flows and reports of internal control. In reality, he did not conduct any independent auditing or verification of financial statements or tax returns provided by Madoff and others at Bernard L. Madoff Investment Securities LLC in New York. He claims he was unaware of Madoff's Ponzi scheme, which spanned 20 years and defrauded investors of billions of dollars. It was Friehling’s accounting that kept the Ponzi scheme concealed from regulators.
Friehling faces a statutory maximum sentence of 114 years in prison and is out on bond awaiting sentencing in February 2010. He has agreed to forfeit $3.1 million, representing the total amount of compensation he received from Madoff’s firm for his accounting and tax services, plus the amount that he and his family withdrew from their investment advisory accounts with Madoff.
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