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NYC accountant is arrested in Madoff fraud

Published on NewsOK Modified: September 26, 2013 at 6:08 pm •  Published: September 26, 2013
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NEW YORK (AP) — An accounting executive was arrested Thursday on charges he helped Bernard Madoff maintain his historic fraud with false bookkeeping meant to deceive some of the wealthiest victims, though his lawyer said his client was himself "a victim of a sociopath."

The executive, 77-year-old Paul Konigsberg, of Greenwich, Conn., was charged with five crimes in an indictment unsealed in federal court in Manhattan. Prosecutors said Konigsberg was a senior tax partner at the accounting firm Konigsberg Wolf & Co. when he directed others since at least the early 1990s to falsify records to conceal a fraud that cheated thousands of investors out of nearly $20 billion.

Konigsberg pleaded not guilty at an arraignment to charges carrying a potential penalty of up to 40 years in prison. His lawyer, Reed Brodsky, insisted he was a victim of Madoff, the onetime high-flying financier who pleaded guilty to fraud charges in 2009 and was sentenced to 150 years in prison. The lawyer noted that the Securities and Exchange Commission and thousands of investors were duped for decades by Madoff.

"Mr. Konigsberg was no different," Brodsky said. "He and his family lost over $10 million."

Konigsberg was freed on $2 million bail. Outside court, Brodsky said Konigsberg looked forward to clearing his name.

"He is a victim of a sociopath, Bernie Madoff," Brodsky said. Konigsberg declined to comment.

In court, Assistant U.S. Attorney Matthew Schwartz said Konigsberg was Madoff's "accountant of choice" for important clients. He said Konigsberg backdated trades by months or years to further the fraud. The indictment said Konigsberg was paid between $15,000 and $25,000 monthly for work related to one of Madoff's oldest and largest clients, a customer who deposited and withdrew tens of billions of dollars with Madoff over the years and benefited from "glaringly fraudulent trades in his accounts."

"These are serious charges," Schwartz said, arguing that Konigsberg's substantial assets made him a flight risk.

Konigsberg, also a lawyer, is the only person outside the Madoff family to have held an ownership interest in Madoff's private investment business with his minority interest in Madoff Securities International Limited, Madoff's London-based affiliate, the indictment said.

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