Madoff family asked to return money – Accountant arrested for fraud

March 18, 2009

(Chattahbox) – In a continuance to yesterday’s news, the web of intrigue and deceit surrounding Bernard Madoff’s disgraced operation continues to generate victims. For once, however, the ensnarement is earned. The New York Times is reporting that the Accountant responsible for auditing Mr. Madoff’s business has been charged with six counts of investment and securities fraud, and making false filings to the SEC.

The accountant, David G. Friehling, 49, was Mr. Madoff’s chief auditor for over ten years and the charges cover his actions for that entire period. He assumed the post when his Father-in-Law, Jeremy Horowitz, retired from the two-man business, and court papers prove he proceeded to draw over $180,000 a year in fees for his work, and siphoned more than $14 million from multiple accounts he and his family held with Madoff’s two firms. He then ”deceived investors by creating false and fraudulent certified statements, and causing those to be filed with the SEC,” according to the formal complaint filed today by the F.B.I.

Many people whose lives and fortunes were marred by the case have complained that the use of such a tiny Accountancy firm to manage such an apparently vast operation should have presented horrendous red-flags to regulators and others, and the fact these were either missed or ignored is proof, they suggest, of flagrant incompetence or even complicity by those in authority. The firm itself was the agent for over two-dozen accounts with Mr. Madoff’s firm, with over a hundred directly controlled by Mr. Friehling himself, from which court papers show, he had drawn more than $5-million in cash since 2001.

Neither Mr. Friehling nor his elected Attorney have released any statement regarding the arrest or the firm’s involvement with Madoff’s operation, but those familiar with the case say he is the first of many who can expect to face charges. Next on the list are Mr. Madoff’s two sons, from whom the government is seeking the return of $31-million in loans from their Father. Mr Madoff’s wife, Ruth, has also been served with papers demanding the forfeit of over $100-million in homes, cars, boats, invesments and an extensive collection of designer jewelry. The total reparation is said to be around $170-billion – all of it funded by her husband’s deceit.

In a sad and rather ironic footnote to this latest arrest, Mr. Friehling’s former partner, Mr. Horowitz, passed away at his Miami home after a long battle with cancer, on the same day Mr. Madoff was convicted. The Madoff family’s net worth is listed at $826-million. Mr. Horowitz’s family, however, are in arrant despair as his entire net worth was consumed by the fraud.

Mr. Madoff’s lawyers are due to file an appeal on Thursday protesting their client’s detention, and the case and its seemingly unquenchable fallout will surely continue for many months to come.


One Response to “Madoff family asked to return money – Accountant arrested for fraud”

  1. James Raider on March 18th, 2009 2:47 pm

    The Judicial system is missing the boat on this one. There is a deal that should be made with Madoff.

    Make Madoff a deal he will not refuse.

    The objective is NOT revenge, but Restitution and Reconstruction.

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