The accountant for Bernard Madoff was arrested and is out of jail on a $2.5 million bond. David Friehling faces up to 105 years behind bars on charges he “rubber stamped” Madoff’s books. The U.S. Attorney’s Office charged Friehling with securities fraud, aiding and abetting investment adviser fraud and four counts of filing false audit reports to the SEC.
The SEC Complaint recites some juicy facts: the Friehling family invested for many years with Madoff, up to $14 million. David Friehling tried to hide his investment by replacing his name with his wife’s name and later with “Friehling Investment Fund.” The family withdrew $5.5 million since 2000. And the Friehling firm made $186,000 per year from1991 to 2008 – that’s over $3 million in fees over 17 years. Also, the SEC Complaint alleges that Friehling lied to the AICPA that didn’t do audit work he claimed to do and lied to the SEC about Madoff’s Form X-17-A-5.
What does this mean? Criminally, it looks like the government started by arresting Friehling: the low hanging fruit. Friehling is an easy one. The big question is who’s next? Likely DiPasquale and the other Madoff Securities employees. What about family? Who knows.