Madoff number cruncher charged with fraud

The Securities and Exchange Commission charged Eric Lipkin, a longtime employee at Bernard L. Madoff Investment Securities, with helping Madoff and his firm deceive and defraud investors and regulators. Lipkin is neither admitting nor denying the charges, and is looking to cut a deal with authorities. Bernard Madoff pleaded guilty in March 2009 for building a fictitious investment empire where money coming in was used to directly pay previous investors, without really investing the funds as promised. The massive Ponzi scheme’s alleged contributors all sat together at Madoff’s New York offices. Fabricated gains are claimed to be north of $65 billion. The SEC alleges that Lipkin “helped create the detailed and entirely phony trading and business records that contributed to the success of Madoff’s fraud,” according to George Canellos, director of the SEC’s New York regional office. “The SEC is committed to holding accountable those who helped to perpetrate and conceal Madoff’s scheme.” In November 2010, the SEC also charged fellow long time employees Annette Bongiorno and Joann Crupi as conspirators. Lipkin, however, was not taken into custody by federal agents. Lipkin has consented to a proposed partial judgment, according to the SEC. This will require Lipkin to disgorge ill-gotten gains and pay a fine, if the New York courts find the terms acceptable. The SEC alleges that for more than a decade, Lipkin helped Madoff defraud investors and mislead auditors and regulators about Madoff’s fraudulent, multibillion-dollar advisory operations. He worked in the investment advisory operations area. According to the SEC complaint, 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 Madoff and BMIS claimed to be pursuing on behalf of its clients. “In fact, Madoff used investors’ funds to enrich himself, his family and his associates, and to pay off other investors. Lipkin also helped Madoff deceive regulators by preparing fake Depository Trust Clearing Corp. reports showing the sham investments for clients,” the SEC said. “Lipkin received annual bonuses from the firm, including for his work to mislead auditors and examiners, and he received $720,000 from Madoff to purchase a house, an amount he never paid back.” Write to Jacob Gaffney. Follow him on Twitter @JacobGaffney.