The SEC charged Paul Konigsberg, Bernard Madoff’s accountant for many of his wealthiest clients, last week for his role in the fabrication of records used in a massive Ponzi scheme.
Authorities charge that Konigsberg helped to create phony trade confirmations each month, as well as false data and records documenting fake trades that were listed in related documents at Bernard L. Madoff Investment Securities.
“Konigsberg played a vital role in Madoff’s deception of his oldest and wealthiest clients over many years,” Andrew M. Calamari, the director of the SEC’s New York regional office, said. “Konigsberg’s acquiescence, cooperation and collaboration were essential to the Madoff fraud.”
The U.S. Attorney’s Office for the Southern District of New York also announced last week that it would pursue criminal charges against Konigsberg. The SEC said in its complaint that Konigsberg aided and abetted the falsification of documents and books at BMIS, from at least the 1990s until 2008.
Konigsberg provided accounting services for more than 200 of BMIS’ clients, including five of Madoff’s oldest and wealthiest clients who had combined over $1 billion invested in BMIS. He received fees directly from clients for the services he provided, and BMIS and Madoff paid him a monthly fee of $15,000 or $20,000 as a retainer for providing services to a client and his adult children.
The SEC also alleges that Konigsberg colluded to manufacture the losses and tax gains reflected in BMIS documents, records and computer systems to ensure that his clients received favorable tax treatment, conferred on fake activity put into the computer systems to create desired trading results and destroy his clients’ true BMIS statements.
In its complaint, the SEC seeks disgorgement of ill-gotten gains, financial penalties and permanent injunctions against Konigsberg.