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Monday
Nov212011

Madoff Trader Pleads Guilty to 40 Years of Fraud

Bernard Madoff leaves federal court Jan. 14, 2009 in New York City. Mario Tama/Getty Images(NEW YORK) -- A former trader for Bernie Madoff has pleaded guilty to fraud and conspiracy charges that date to the 1970s, well before Madoff said he began his Ponzi scheme.  

David Kugel had been accused of playing a “critical role” in the crime.  Prosecutors said he conspired to commit securities fraud and bank fraud and falsified records for almost 40 years.  Madoff has said his scam began in the 1990s.

Kugel is the fifth former employee, including Madoff, to plead guilty and cooperate with the government.  

Irving Picard, the court-appointed trustee overseeing the liquidation of Bernard L. Madoff Investment Securities, has said Kugel “very likely was the architect” of Madoff’s fraudulent strategy in which clients were told their money was properly invested when in fact it was not.  

“Over the years,” Picard’s lawsuit against Kugel says, “Kugel structured the fraudulent trades which were allocated between the accounts held by BLMIS investors.”

Prosecutors say Kugel agreed to forfeit tens of billions.  In the two years prior to the fraud being exposed the Kugels withdrew millions from their accounts in what Picard calls “attempts by the Kugels to save some of their ill-gotten gains before the fraud was discovered.”

Kugel also agreed to settle civil charges filed by the Securities and Exchange Commission.

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

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