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Ex-Madoff accountant pleads guilty to aiding fraud

By Joseph Ax

NEW YORK (Reuters) - Bernard Madoff’s former accountant pleaded guilty on Tuesday to helping the convicted swindler perpetrate his massive Ponzi scheme.

Paul Konigsberg, 78, a former senior tax partner at Konigsberg Wolf & Co, pleaded guilty to one count of conspiracy and two counts of falsifying the records of a broker-dealer before U.S. District Judge Laura Taylor Swain in New York. He also agreed to forfeit $4.4 million.

He became the 15th person to plead guilty or be convicted at trial in connection with the fraud.

"I'm here today to take responsibility for what I did wrong," Konigsberg told Swain.

He said he had worked with others at Madoff's firm to manipulate customer account statements, including by backdating transactions, and then filed false tax returns based on those amended statements.

But he said he had not been aware that Madoff's entire investment advisory business was a massive fraud.

"It's important to me to say that I was not aware of Madoff's horrific and evil Ponzi scheme that brought so much suffering to so many," he told Swain.

As part of his plea deal, he agreed to cooperate with prosecutors, who said in a court filing they would recommend a lighter sentence if he provided "substantial assistance in an investigation or prosecution."

It's not clear whether prosecutors are continuing to probe additional crimes tied to Madoff's fraud; Konigsberg was the only criminal defendant whose charges remained pending.

Prosecutors said Madoff steered some of his biggest clients to Konigsberg for accounting services. Konigsberg was handling more than 300 investment accounts at Madoff when the scheme collapsed in December 2008, according to prosecutors.

He was also a minority shareholder in Madoff's London-based affiliate, the only person outside the Madoff family to own a stake in one of Bernard Madoff's businesses, prosecutors said.

Madoff, 76, is serving a 150-year prison sentence after pleading guilty in 2009 to running the decades-long fraud that was uncovered in December 2008 and estimated to have cost customers more than $17 billion in principal.

Konigsberg's plea came three months after a federal jury convicted five former Madoff aides on all counts following a months-long trial in New York.

The aides, including portfolio managers Annette Bongiorno and Joann Crupi, computer programmers Jerome O'Hara and George Perez, and back-office director Daniel Bonventre, have asked Swain to throw out their convictions.

Several former Madoff employees who have pleaded guilty testified for the government at the trial, including Madoff’s former right-hand man, Frank DiPascali.

Other Madoff employees who pleaded guilty included his brother, Peter; another former accountant, David Friehling; and Enrica Cotellessa-Pitz, the controller for Madoff's firm.

Konigsberg faces up to 30 years in prison when he is sentenced, but a maximum sentence is unlikely given his plea agreement.

The case is U.S. v. O'Hara et al., U.S. District Court for the Southern District of New York, No. 10-228.

(Reporting by Joseph Ax; Editing by Noeleen Walder, Jeffrey Benkoe and Cynthia Osterman)

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