Bloomberg News

Ex-Madoff Controller Lipkin Pleads Guilty to Two Counts

November 08, 2012

Irwin Lipkin, the first employee hired by Bernard Madoff’s defunct investment firm, pleaded guilty to falsifying books and records, claiming he unwittingly helped Madoff’s fraud.

“While working for Bernie Madoff, I made accounting entries in financial records that I knew were inaccurate,” Lipkin, 74, told U.S. District Judge Laura Taylor Swain in a hearing today in Manhattan. “These filings helped Mr. Madoff run the Ponzi scheme that harmed thousands of people.”

Lipkin, Madoff’s former controller, pleaded guilty to conspiracy and to making false statements in employment records. Lipkin, who used a wheelchair at the sentencing, was to have pleaded guilty in September. He told Swain today that he has been hospitalized twice in the past several months and suffered from pneumonia. Lipkin faces as long as 10 years in prison when he’s sentenced on March 22.

In pleading guilty, Lipkin told Swain he didn’t know that Madoff was running a vast fraud. He retired from Madoff’s firm in 1998, he said.

“I would like the court to know that at no time before I retired was I ever aware that Mr. Madoff or anyone else at the company was engaged in the Ponzi scheme reported in the media,” Lipkin said. “My belief in Bernie Madoff’s trading skills was such that I encouraged my own family to invest their money in accounts managed by Mr. Madoff.”

Son’s Plea

David Richman, Lipkin’s lawyer, didn’t elaborate on his client’s statement when asked after the hearing how Lipkin could have not known of Madoff’s fraud.

Swain said Lipkin may remain free until sentencing on a $1.5 million bond, to be secured with $250,000 in cash or property.

Lipkin’s son, Eric Lipkin, pleaded guilty to six criminal counts in June 2011, admitting he falsified documents to show non-existent holdings in accounts and to pay people for no-show jobs. Eric Lipkin, who is cooperating with the government’s investigation into the Madoff fraud, faces as long as 70 years in prison when he’s sentenced.

Irving Picard, the New York lawyer appointed to liquidate Madoff’s former firm, sued Eric and Irwin Lipkin and their families in 2010 to recover $9.2 million in money he claims they received from Madoff’s fraud.

‘Like Family’

Madoff hired Irwin Lipkin in 1964 as his firm’s first employee, Lipkin said at today’s hearing. Madoff continued paying him for several years after he had retired to Florida, Picard said.

“Irwin considered himself to be like family to Madoff, and over the years, Irwin served as the controller in Madoff’s inner circle of core employees,” Picard said in his complaint, adding that Irwin referred to Madoff in a 1998 letter as “the brother I never had.”

In June, Peter Madoff pleaded guilty to helping his brother commit the biggest Ponzi scheme in U.S. history. Bernard Madoff, who was arrested in December 2008, pleaded guilty and is serving a 150-year sentence in federal prison in North Carolina.

The case is U.S. v. Madoff, 10-cr-00228, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Bob Van Voris in New York at rvanvoris@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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