White-Collar Crime

Madoff's former accountant takes plea, will be 15th defendant convicted for role in $17.5B sheme

  • Print

A former accountant for Bernard Madoff has taken a plea concerning his role in the massive hedge-fund-investment-scheme swindle for which Madoff himself is now serving a 150-year federal prison sentence.

Paul Konigsberg, 78, who was formerly the senior tax partner of Konigsberg Wolf & Co., pleaded guilty Tuesday in federal court in Manhattan to conspiracy, falsifying the records of a broker-dealer and falsifying the records of an investment adviser, according to Bloomberg and Reuters.

Assuming his plea goes through, he will be the 15th defendant convicted in the case.

Prosecutors said Madoff operated the Ponzi scheme starting in the 1970s. However, it wasn’t until 2008—despite several warnings to federal regulators that Madoff’s business couldn’t be legitimate—that his claimed hedge fund was revealed when, because of the economic crash, Madoff ran short of funds to cover withdrawals. Meanwhile, some $17.5 billion in investment principal was lost.

Konigsberg became involved in 1992 and was accused of helping to cover up the fraud by creating fraudulent trading records and books for Madoff’s firm, prosecutors said. In exchange, Madoff sent important clients to the accountant.

In addition to what these clients paid Konigsberg, the government said he got $15,000 to $25,000 per month from Madoff’s business, USA Today reports.

Konigsberg admitted he saw a Madoff assistant, who has also been convicted, alter a client account statement and file a tax return based on the erroneous information. That “was wrong and I knew it at the time,” he told U.S. District Judge Laura Taylor Swain at Tuesday’s hearing. However, the accountant said he didn’t know about Madoff’s “horrific and evil Ponzi schemes.”

Konigsberg could get as much as 30 years and face seven-figure financial penalties when he is sentenced at a later date. He also faces related civil litigation brought by the U.S. Securities and Exchange Commission.

See also:

ABAJournal.com: “Jury convicts 5 Madoff staffers; accountant is now last remaining defendant in $17.5B scheme”

Give us feedback, share a story tip or update, or report an error.