(Updates with SEC lawsuit in 11th paragraph.)
June 6 (Bloomberg) -- Former Bernard Madoff employee Eric Lipkin pleaded guilty to charges that he falsified documents to help carry out the biggest Ponzi scheme in U.S. history.
Lipkin, 37, pleaded guilty to six criminal counts, including conspiracy, falsifying records and bank fraud, in a hearing today in Manhattan federal court. Lipkin agreed to cooperate with the government in its investigation of the fraud at Bernard L. Madoff Investment Securities LLC, which became public with Madoff’s arrest in December 2008.
“I’d like to first apologize to my family, my friends and all the victims in the case,” Lipkin told U.S. District Judge Laura Taylor Swain.
Lipkin then told Swain that he falsified documents to show non-existent account holdings, to put people on the Madoff payroll who didn’t work for the firm and to fraudulently apply for a construction loan. Swain accepted Lipkin’s plea before approving an agreement between Lipkin and federal prosecutors to release him on a $2.5 million bond pending his sentencing.
Swain told Lipkin he faces as long as 70 years in prison. Madoff, 73, is serving a 150-year term in a North Carolina prison.
Frank DiPascali Jr., a key Madoff lieutenant, pleaded guilty Aug. 11, 2009, to his role in the fraud and he faces as long as 125 years in prison. The government said DiPascali gave invaluable assistance in detailing Madoff’s fraud. Prosecutors also obtained a guilty plea from Madoff’s former accountant, David Friehling.
Five former Madoff employees charged by Manhattan U.S. Attorney Preet Bharara’s office await trial before Swain in connection with the money manager’s multibillion-dollar fraud. All have pleaded not guilty.
Annette Bongiorno, who recruited investors and helped run Madoff’s investment advisory office, and Joann Crupi, of Westfield, New Jersey, were arrested and charged by the U.S. in November.
The U.S. previously charged Daniel Bonventre, Madoff’s ex- operations chief, and Jerome O’Hara and George Perez, both former programmers who worked at Madoff’s investment business. No trial date has been set.
Swain said Lipkin, his wife and children must surrender their passports. Lipkin’s bond will be secured by $800,000 in cash and property. Swain set Dec. 15 for the next hearing in the case.
The U.S. Securities and Exchange Commission sued Lipkin today in the same court, seeking an order for him to disgorge his ill-gotten gains. Lipkin’s salary at Madoff’s firm was $225,000 a year and he received frequent bonuses, the SEC said in the complaint.
“Lipkin also obtained a payment of $720,000 from Madoff to purchase a house,” the SEC said. “Lipkin never signed a promissory note for this payment, never discussed the terms of the payment with Madoff, and never paid the amount back to Madoff.”
The case is U.S. v. Lipkin, 10-CR-228, U.S. District Court, Southern District of New York (Manhattan). The SEC case is Securities and Exchange Commission, 11-cv-03826, U.S. District Court, Southern District of New York (Manhattan).
--Editors: Peter Blumberg, Michael Hytha
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