Madoff accountant charged with aiding Ponzi scheme

Thu Sep 26, 2013 7:41pm EDT
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By Jonathan Stempel and Bernard Vaughan

NEW YORK (Reuters) - A former accountant for Bernard Madoff has been indicted on charges he helped the convicted swindler defraud thousands of customers in the Ponzi scheme masterminded by Madoff, nearly five years after the fraud was uncovered.

Paul Konigsberg, the former accountant and a former senior tax partner at Konigsberg Wolf & Co in New York, was arrested on Thursday and charged with two counts of conspiracy and three counts of falsifying records and statements. The U.S. Securities and Exchange Commission filed related civil charges.

Konigsberg, 77, with matted gray hair and wearing a blue button-down shirt and gray slacks, pleaded not guilty in a brief afternoon appearance before U.S. Magistrate Judge Debra Freeman in Manhattan.

He was freed on $2 million bond with restricted travel. Konigsberg, a Greenwich, Connecticut, resident, hugged his brother after leaving the courtroom. The defendant faces up to 40 years in prison, plus fines and other financial penalties.

Konigsberg is the 15th individual to be criminally charged over the fraud centered at Bernard L. Madoff Investment Securities LLC. The trustee liquidating the firm has estimated that investors lost about $17.3 billion of principal.

"Paul Konigsberg threw aside his ethical duties as an accountant in favor of his role as a false bookkeeper, which included allegedly participating in a scheme of backdating client account statements to show fictitious trades and conjuring profits and losses of millions of dollars," U.S. Attorney Preet Bharara in Manhattan said in a statement."

Reed Brodsky, a lawyer for Konigsberg, said his client was also a victim of Madoff's fraud, with Konigsberg's family having lost $10 million.

"For a number of months, we've tried to demonstrate to the federal authorities that Mr. Konigsberg has committed no crime," Brodsky said outside the courthouse after the hearing. "He is a victim of a sociopath - Bernie Madoff."   Continued...

Bernard Madoff walks back to his apartment in New York December 17, 2008. REUTERS/Shannon Stapleton