Tuesday, November 22, 2011

SEC Charges Longtime Madoff Employee with Creating Fake Trades

The SEC charged a longtime Bernie Madoff employee with fraud for his role in creating fake trades to facilitate the massive Ponzi scheme.

The SEC alleges that the employee, who worked at Bernard L. Madoff Investment Securities LLC (BMIS) for nearly four decades, was asked by Madoff to provide the firm’s investment advisory operations with backdated arbitrage trade information to be made into fictitious trading on investors’ account statements. The employee’s own account at BMIS was among those in which backdated trades were entered, and he withdrew nearly $10 million in “profits” from the fictitious trading over several years. According to the allegations against the employee filed in U.S. District Court for the Southern District of New York, others implicated in Madoff’s investment advisory operations used the information provided by the employee to formulate fictitious trades to appear on investor account statements.

George S. Canellos, director of the SEC's New York Regional Office said "Kugel helped Madoff maintain the elaborate and enduring facade that his clients were engaged in actual trading when in fact no such trading occurred. Kugel withdrew millions of dollars of phony profits that he knew weren't from actual trading activity."

SEC Charges Longtime Madoff Employee with Creating Fake Trades
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