Bernie Madoff Accountant Charged with Fraud


Share this Post

NBC News reported this week that Paul Konigsberg, an attorney and accountant, was charged yesterday with falsifying records and related securities connected to the Bernie Madoff Ponzi scheme. Konigsberg is the only non-Madoff family member who owned a controlling interest in the investment fund.

The indictment released by the District Attorney for the Southern District of New York almost reached 20 pages, and claimed "Madoff directed many of his clients - including some of his most important customers, in whose accounts Madoff executed the most glaringly fraudulent transactions -- to use Paul Koningsberg, the defendant, as their accountant." Konigsberg's duties included backdating trades and bank statements as part of keeping bogus records to cover up the fraud.

U.S. Attorney Preet Bharara, speaking on the case, said that "As alleged, 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 back-dating client account statements to show fictitious trades and conjuring profits and losses of millions of dollars. With today’s indictment, he will be made to answer for his alleged conduct as yet another player on Madoff’s team."

Meanwhile, the AP reported via the CS Monitor that Konigsberg's lawyer, Reed Brodsky, is taking a different approach to his client's defense. Brodsky insists that Konigsberg was just another victim of a "one-time high-flying financier" whose profits were so dirty, his jail sentence matches that of serial sexual murderers. "He and his family lost over $10 million," Brodsky said. "Mr. Konigsberg was no different [than any of Madoff's other victims]."

On the prosecutor's bench, Assistant U.S. Attorney Matthew Schwartz said of Konigsberg's role that he was the "accountant of choice" for deep-pocketed Madoff clients. Konigsberg was paid $15,000 to $25,000 a month to backdate trades for years to deepen the fraud. The prosecutor also alleged that one of Madoff's oldest clients worked directly with Konigsberg as he deposited and withdrew billions while benefiting from the fraudulent trading.

The Bernie Madoff Ponzi scheme was broken up in late 2008 and early 2009. Madoff's sons turned him into the FBI, and on March 12, 2009, he pled guilty to 11 federal charges and admitted his role in maintaining the largest Ponzi scheme in human history thus far.

[Image via this WSJ YouTube video about the Madoff Scandal]