A former employee pleaded guilty Monday in federal court to helping Bernie Madoff create false records for investors.
Eric Lipkin, who worked for Bernard L. Madoff Investment Securities for more than a decade, faces as many as 70 years in prison for his part in the multibillion dollar scheme to defraud investors, globally.
Creating false records was at the heart of the Madoff Ponzi scheme.
“Eric Lipkin helped create the detailed and entirely phony trading and business records that contributed to the success of Madoff’s fraud,” said George S. Canellos, Director of the New York Regional Office of the Securities and Exchange Commission.
The SEC, in its complaint, said Lipkin processed payroll records for “no-show” employees, falsified records of investors’ account holdings, and played a role in executing the "entirely fictitious investment strategy" that the Madoff firm claimed to be pursuing on behalf of clients.
Lipkin also helped Madoff deceive regulators by preparing fake Depository Trust Clearing Corporation (DTCC) reports showing the sham investments for clients.
Lipkin received annual bonuses from the firm, the SEC said, for the work and received $720,000 from Madoff to purchase a house, which he never paid back.
Without admitting or denying the allegations of the SEC’s complaint, Lipkin has consented to a proposed partial judgment, which, if entered by the court, will impose a permanent injunction against Lipkin and require him to disgorge ill-gotten gains and pay a fine in an amount to be determined by the court at a later time.
In court, Lipkin, 37, pled guilty to six criminal counts, including conspiracy, falsifying records and bank fraud, according to Bloomberg.
Lipkin then told U.S. District Judge Laura Taylor Swain that he falsified documents to show non-existent account holdings, to put people on the Madoff payroll who didn’t work for the firm and to fraudulently apply for a construction loan, Bloomberg reported.
Lipkin was released on a $2.5 million bond pending his sentencing.