Ex-Madoff trader pleads guilty in plea deal in NYC
NEW YORK (AP) — Jailed financier Bernard Madoff's multibillion-dollar Ponzi scheme stretched back at least to the early 1970s, when his employees used historical information about stocks to create false trades that could be placed on customer statements, a former trader revealed as he pleaded guilty Monday to criminal charges.
David Kugel pleaded guilty in U.S. District Court in Manhattan to conspiracy, securities fraud, bank fraud, falsifying business records and falsifying the books of an investment adviser, charges that carry a potential penalty of up to 85 years in prison. A cooperation deal with prosecutors that leaves Kugel free on $3 million bail would earn him leniency at a sentencing tentatively scheduled for May 4. As part of the plea, he agreed to forfeit $3.5 million to the government.
The 66-year-old Kugel told Judge Laura Taylor Swain that he was engaging in fraud in the private investment wing of Madoff's Manhattan-based business in the early 1970s.
He said he was "deeply sorry."
"I want the court to know I will do all I can to cooperate with the government," Kugel, of Manhasset, said at the outset of a statement he gave describing his fraud.
He said it stretched from the early 1970s to Dec. 11, 2008, when Madoff revealed that a business he started in the 1960s had turned into a giant Ponzi scheme, causing the loss of $19.5 billion invested by thousands of people and institutions, including charities.
Madoff, who is serving 150 years in prison for orchestrating the largest Ponzi scheme in history, told the court during his guilty plea to fraud charges in March 2009 that the fraud had been going on less than two decades.
But Kugel said he and other Madoff employees were faking trades in the 1970s to give "the appearance of profitable trades when, in fact, no trading had occurred."
In addition, he said he caused false financial information to be submitted to financial institutions from 2002 to 2007 so he and others could obtain mortgages and loans.
He said he overstated the value of the assets held by he and others to obtain the loans on homes that the government said were worth millions.
"Did you know that what you were doing was wrong and unlawful?" Swain asked Kugel.
"Yes, your honor," Kugel answered.
Kugel had worked at Madoff's firm since 1970, a prosecutor said.