A former accountant for Bernard Madoff has been indicted for helping the convicted swindler defraud thousands of customers in a Ponzi scheme, nearly five years after the fraud was first uncovered.
The Securities and Exchange Commission (SEC) has charged Paul Konigsberg, former tax partner in Konigsberg Wolf & Co in New York, over his role in the creation of false books and records used in the massive Ponzi scheme which ran from the mid 1990s to late 2008.
The US regulator alleges that Konigsberg's assistance resulted in the formation of inaccurate trade confirmations each month as well as the development of phony data and records documenting the fabricated trades that were, in turn, falsely reflected in the ledgers and related books and records at Bernard L. Madoff Investment Securities LLC (BMIS).
Andrew Calamari, director of the SEC's New York regional office said: 'Konigsberg played a vital role in Madoff's deception of his oldest and wealthiest clients over many years. Konigsberg's acquiescence, cooperation, and collaboration were essential to the Madoff fraud.'
According to the SEC, Konigsberg collaborated with BMIS staff in agreeing the investment or tax gains and losses to be manufactured and reflected on BMIS account statements and in BMIS computer systems so as to ensure clients enjoyed favourable tax treatment for their purported investment activity.
Konigsberg helped staff by entering fictitious account activity and backdated trades into the computer systems in order to create the desired trading results, and also destroyed clients' true account statements and came up with alternative fictitious account activity to be entered into the firm's books and records and reflected on new phony account statements.
The SEC says Konigsberg provided tax or accounting services for more than 200 BMIS client accounts, including five of Madoff's wealthiest and oldest clients who invested more than a billion dollars in the fraudulent scheme. Konigsberg received fees directly from these clients, and BMIS and Madoff paid him a monthly 'retainer' of $15,000 (£9,300) or $20,000 (£12,400) for providing accounting services to one wealthy Madoff client and his adult children.
In a parallel action, the US Attorney's Office for the Southern District of New York has announced criminal charges against Konigsberg, including two counts of conspiracy and three counts of falsifying records and statements. After a court appearance yesterday Konigsberg was freed on $2m (£1.24m) bail with restricted travel. He faces up to 40 years in prison, plus fines and other financial penalties.
Konigsberg is the 15th person to stand trial over the Madoff scheme, in which investors lost more than $17bn (£10.6bn) directly and potentially up to $65bn (£40bn) if indirect losses are added in. Madoff's long-serving secretary and four other former employees are due to stand trial in Manhattan on 7 October accused of aiding the fraud. All five have pleaded not guilty.
