David Friehling, the long-time outside auditor for Bernard Madoff, pleaded guilty to nine criminal counts in connection with the massive Ponzi scheme.
Friehling pleaded guilty Tuesday and then left court with aides clearing away photographers to make way to a waiting car. Federal judge Alvin Hellerstein allowed Friehling to remain free on bail after prosecutors said the disgraced accountant has agreed to tell what he knows about others who helped carry out the largest Ponzi scheme in history.
In court, Friehling pleaded guilty to nine counts of securities fraud, investment advisor fraud and lying to the Securities and Exchange Commission as well as the Internal Revenue Service. "I committed these crimes as the independent auditor" for Bernie Madoff, Friehling said.
While Friehling worked as Madoff's outside accountant for more than 17 years, he claimed he never knew Madoff was running a Ponzi scheme. He said he too is a Madoff victim, claiming he lost $500,000 of his family's money that he had invested. "I was at no time aware Madoff was involved in a Ponzi scheme ... The biggest mistake of my life was to trust Bernie Madoff."
The accountant admitted he never conducted any reviews of Madoff's business as was required. He said he just took Madoff's word for it and filed the bogus paperwork in exchange for monthly payments to his Rockland County firm, where he worked alone. "The information (I filed) I knew was not accurate," he said.
Friehling said he had gone into business with his father-in-law years ago and later took over the firm. He said he got involved in the business through his wife whose family had been longtime friends with Ruth Madoff.
Friehling did not name names in court but prosecutors said there were others at the Madoff firm who used Friehling's services to commit tax fraud. Investigators are not saying when additional arrests might come and whether Madoff's sons and brother remain under suspicion.
United States Attorney Preet Bharara said, "David Friehling was one of the key enablers of Bernard Madoff's historic fraud. With his guilty plea, Friehling has taken responsibility for his crimes and will now assist us in holding others accountable for their involvement in Madoff's epic fraud against so many victims."
Madoff's lawyer Andrew Lankler declined comment about the shoving of still photographers by one unidentified man who was escorting Friehling out of court. The judge let the admitted crook walk out of court instead of putting him behind bars after no victims stood up to voice objection to his release amid his cooperation agreement.
In court, Friehling apologized to the victims. "I am truly sorry," he said.
Friehling could face up to 114 years in prison if convicted. By cooperating, Friehling is hoping to receive a reduced sentence. The married father of three remains free on $2.5 million dollars bond. He and his wife have turned in their passports.
Bernie Madoff remains behind bars for running the $64 billion dollar scheme. His right hand man, Frank DiPascali, has also pleaded guilty and has offered to cooperate. But the judge in that case did not grant bail saying he should offer his cooperation from a prison cell given the crimes he committed.