Longtime Madoff employee admits decades of fraud
11/08/2012| 08:40pm US/Eastern
One of Bernard Madoff's longest-serving employees pleaded guilty on Thursday to falsifying records, a conspiracy that a prosecutor said began in the 1970s at the start of the multibillion-dollar Ponzi scheme.
Irwin Lipkin, 74, a former controller of Bernard L. Madoff Investment Securities LLC, told a Manhattan federal court judge that for years he fudged the books on Madoff's orders, but that at no point did he suspect the epic, decades-long fraud.
"While working for Bernie Madoff, I made accounting entries in financial records that I knew were inaccurate," Lipkin said. "At no time before I retired was I ever aware that Mr Madoff or anyone else at the company was engaged in the Ponzi scheme reported in the media."
Lipkin, who signed a plea agreement with federal prosecutors, pleaded guilty to charges of conspiracy to commit securities fraud and falsifying documents. The charges carry up to 10 years in prison.
Lipkin's son, Eric Lipkin, another former Madoff employee, pleaded guilty in 2011 to criminal charges of bank fraud and charges that he reported people were Madoff employees so they could receive retirement benefits.
Irwin Lipkin joined Madoff's firm in 1964, he told the court on Thursday. He was Madoff's first employee who was not a Madoff family member. Although he retired in 1998, he and his wife illegally remained on the Madoff payroll and received benefits but did not work, Lipkin said.
Prosecutor Julian Moore told judge Laura Taylor Swain that "as early as the mid 1970s" Lipkin had begun changing the financial records of accounts at Madoff's direction.
Madoff, 74, was charged in December 2008 with a decades-long fraud that the government originally estimated at as much as $64.5 billion. He pleaded guilty in March 2009 and is serving a 150-year prison sentence.
The trustee leading the search for money to return to Madoff's victims says Madoff defrauded customers of about $20 billion. The trustee, Irving Picard, so far has won over $9 billion in recoveries and settlement agreements.
On June 29, Madoff's brother Peter pleaded guilty to criminal charges. He had been chief compliance officer at his brother's firm. He has agreed to accept a 10-year prison term and will be sentenced in December.
Of more than a dozen people charged in the case, apart from Bernard Madoff, five have pleaded not guilty and are awaiting trial.
Among those five, Irwin Lipkin on Thursday said former investment advisory employee Annette Bongiorno had helped him falsify trading records. A lawyer for Bongiorno did not comment on Lipkin's accusations, but said "it saddens us that the government has insisted on prosecuting an elderly, very sick man, who ought to be left alone to die in his bed."
The case is U.S. v. O'Hara et al, U.S. District Court, Southern District of New York, No. 10-cr-228.
(Reporting By Basil Katz; Editing by Gary Hill and Richard Pullin)
By Basil Katz