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FinanceMadoff

Ex-Madoff employees avoid prison

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May 28, 2015, 4:57 PM ET
Bernard L. Madoff leaves US Federal Cour
Bernard L. Madoff leaves US Federal Court after a hearing regarding his bail on January 14, 2009 in New York. Madoff will remain free on bail, a US judge ruled Wednesday, rejecting a bid by prosecutors to detain Madoff pending trial. AFP PHOTO / TIMOTHY A. CLARY (Photo credit should read TIMOTHY A. CLARY/AFP/Getty Images)Photograph by Timothy A. Clary — AFP/Getty Images

(Reuters) – A former outside auditor and a former human resources employee of Bernard Madoff’s firm avoided prison on Thursday, after cooperating with authorities investigating the now-imprisoned swindler’s multibillion-dollar Ponzi scheme.

The auditor, David Friehling, was sentenced by U.S. District Judge Laura Taylor Swain in New York to a year of home confinement, and to pay his share of a symbolic $130 billion joint forfeiture with other defendants.

“I will regret for the rest of my life the role I played in this devastating crime,” Friehling, 55, said in court.

Swain also sentenced the former human resources employee Craig Kugel, 41, to time served, and ordered that he forfeit $2.3 million.

Both men were among the 15 people to be convicted at trial or to plead guilty in connection with the investigation of Bernard L. Madoff Investment Securities following the collapse of Madoff’s Ponzi scheme in 2008.

Madoff is serving a 150-year prison term for orchestrating a fraud that cost investors an estimated $17 billion in principal losses.

Friehling and Kugel testified at the trial of five other former Madoff employees, all of whom were convicted in 2014 and sentenced to prison terms ranging from 2-1/2 to 10 years.

Prosecutors said Friehling, who pleaded guilty in 2009 to charges including securities fraud, never conducted a meaningful review of the firm’s finances but instead rubber-stamped information presented to him by Madoff employees.

Friehling also certified to the U.S. Securities and Exchange Commission that he used standard accounting practices to audit the firm, prosecutors said.

Though Friehling’s actions helped Madoff conceal his fraud, Friehling said he did not know of the Ponzi scheme.

Friehling also served as Madoff’s personal accountant and prepared fraudulent tax returns for Madoff, his brother Peter, and his sons Mark and Andrew, prosecutors said.

Kugel pleaded guilty in 2009 to tax fraud and making false statements.

His father, David, was a longtime trader at Madoff’s firm who also pleaded guilty and was sentenced to 10 months of home confinement on Wednesday.

Craig Kugel also said he was unaware of the Ponzi scheme, but prosecutors said he committed other crimes at the firm.

Specifically, authorities said Kugel enrolled non-employee relatives of workers in the firm’s healthcare plan, and used a company credit card for personal expenses while employed at an affiliate of Madoff’s firm.

For more about Madoff’s fraud, watch this Fortune video:

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