NEW YORK — Federal authorities, deepening their criminal investigation of Bernard L. Madoff’s multibillion-dollar Ponzi scheme, arrested Paul J. Konigsberg, a longtime accountant in Madoff’s inner circle, on Thursday, according to people briefed on the case.
A founding partner of Konigsberg Wolf & Co., a midsize New York accounting firm that is now shuttered, Konigsberg had a close business relationship with Madoff dating to at least the 1980s. He was the only nonfamily shareholder in Madoff’s London operation, which played a crucial role in transferring stolen money around the globe.
Konigsberg prepared tax returns for two family foundations and served as an accountant for dozens of families who invested with the firm. Madoff often referred his investors to Konigsberg for their tax services.
“Paul Konigsberg, a 77-year-old accountant, is an innocent victim of Bernie Madoff,” said Reed Brodsky, a lawyer for Konigsberg at Gibson Dunn & Crutcher. “He looks forward to clearing his good name at trial.”
The charges against Konigsberg come as the government faces a December deadline to bring additional charges connected with the Madoff fraud. When Madoff turned himself in on Dec. 12, 2008, that started the clock ticking on a five-year statute of limitations for securities fraud crimes.
Federal prosecutors asked Konigsberg’s lawyers to grant them an extension of the legal deadline, but they refused, leading to Thursday’s arrest, according to people briefed on the case.
Madoff, who is serving a 150-year prison sentence, has insisted that he acted alone. Yet Konigsberg is the 15th individual charged in the case.
On Oct. 7, five former employees of Bernard L. Madoff Investment Securities are scheduled to stand trial in US District Court in Manhattan on charges they aided the fraud.
Each of the five employees — Daniel Bonventre, Annette Bongiorno, Joann Crupi, Jerome O’Hara, and George Perez — worked at the firm for more than 15 years in a variety of low-level roles, but ones that the government said were key to perpetrating Madoff’s long-running scheme. The trial is likely to last several months, and the defendants are expected to argue that they were manipulated and deceived by Madoff and had no idea their boss was a crook.
Federal prosecutors are still weighing additional criminal charges. Among those under continued scrutiny is Shana Madoff Swanson, Madoff’s niece and a former senior lawyer and compliance official at the firm. Swanson’s father, Peter Madoff, was Madoff’s number two at the firm and is serving a 10-year sentence after admitting to falsifying documents and lying to securities regulators.
Federal authorities are also examining the role of JPMorgan Chase in Madoff’s fraud. Madoff moved billions of dollars of investors’ cash in and out of Chase bank accounts up until his crimes were revealed. Investigators are focused on whether the bank failed to conduct adequate due diligence and properly alert regulators to suspicions about Madoff’s business, said people with knowledge of the investigation.
Actual cash losses from the Madoff fraud are estimated at about $17.5 billion, but the paper wealth that was wiped out totaled more than $64 billion. Irving Picard, the bankruptcy trustee working to retrieve money for Madoff’s victims, has so far recovered about $9.4 billion.