Madoff accountant may be in plea talks with prosecutors
NEW YORK -- Federal prosecutors are conducting discussions with the lawyer for Bernard Madoff's accountant regarding a "possible disposition" of the fraud charges against him.
Assistant U.S. Attorney Lisa Baroni disclosed the talks in a federal court motion seeking a 30-day extension of Friday's deadline for filing a criminal indictment or information against David Friehling, the longtime accountant for the Ponzi scheme architect's securities business.
Magistrate Judge Andrew Peck rescheduled the deadline for May 18.
Prosecutors declined to comment on the issue, and Friehling's attorney, Andrew Lankler, did not immediately return messages seeking comment.
Although the wording of the court motion was routine, similar language is often used to signal a potential plea agreement. Federal prosecutors filed a similar motion before Madoff's guilty plea last month to running a multi-billion dollar scam that victimized thousands of investors.
Friehling, 49, has been free on $2.5 million bond since his arrest last month. The accountant, whose New City, N.Y., firm was listed as Madoff's auditor for 17 years, is charged with securities fraud, investment adviser fraud and submitting false audit filings to the Securities and Exchange Commission.
Friehling is not charged with knowledge of the Ponzi scheme, in which money from new investors is used to pay earlier ones. Instead, prosecutors allege that he failed to conduct "meaningful" audits of Madoff's business and did not satisfy the legal standards to serve as an independent auditor of the disgraced financier's Manhattan-based financial operation.
In a separate civil complaint, the SEC has charged that Friehling "merely pretended to conduct minimal audit procedures of certain accounts to make it seem like he was conducting an audit."
His alleged actions "furthered" the fraud by enabling Madoff's company to send investment clients false statements that Friehling and his accounting firm had audited Madoff's business records, the SEC charged.
