Madoff Accountant David G. Friehling Dodges Prison By Claiming To be An Idiot
“Tip for Fraudsters: Stupid is not a crime. Take the advice of Madoff’s accountant: ““I would rather be regarded as dumb than crooked.” — David G. Friehling” – Sam E. Antar
A federal judge yesterday sentenced Madoff Accountant Mr. Friehling, 55, to a year of home detention and another year of supervised release. Federal District Court Judge Laura Taylor Swain noted that Mr. Friehling had cooperated with federal prosecutors, including testifying against other Madoff defendants last year that resulted in the convictions of five former employees of Mr. Madoff’s securities firm
Mr. Friehling was looking at 100 years in prison for his part in the Madoff Ponzi scheme that authorities estimate caused investors to lose $17.5 billion in principal and tens of billions more in paper wealth.
As a cooperating witness, Mr. Friehling won accolades from federal prosecutors, and because of that he will not serve any time in prison for his role in the financial fraud that went on for more 20 years.
Friehling’s self described ineptitude as an accountant also played a part in his sentencing.
Federal prosecutors, in arguing for a lenient sentence for Friehling, claimed Friehling was unaware of the full extent of the Madoff’s ponzi because Friehling had “abdicated” his responsibilities as the firm’s auditor and approved the financial statements Madoff gave him without asking any questions.
By his own admission, Friehling was not much of an auditor and pretty much rubber-stamped financial statements for Madoff when he plopped them down on his desk.
Randall W. Jackson, an assistant federal prosecutor under Preet Bharara, the United States attorney for Manhattan told the New York Times, “His crime came down to his failure to do his job.”
During his address to the court before Judge Swain handed down her sentence, Friehling apologized to the thousands of victims of Mr. Madoff’s scheme and said he had never had any indication that anything was amiss at the firm.
“I would rather be regarded as dumb than crooked,” Mr. Friehling said, commenting on a statement in which Madoff was said to have referred to him as a “dumb auditor. I did not question what I should have questioned.”
Judge Swain also said that the light sentence was appropriate, given that Friehling and his family had suffered extreme hardship because of the collapse of Madoff’s firm. Friehling and several family members lost money including everything he had saved for his children. In 2012, one of Mr. Friehling’s three children, his son, Jeremy, who was 23, committed suicide.
When Mr. Friehling began talking about his son’s death during his statement to the court, his voice began to quaver for the first time, and it appeared that he was fighting back tears. He said that since his son’s death, he had been volunteering some of his time with a suicide support group.
The only issue Judge Swain took with the prosecution’s request for leniency came on the matter of how much money Friehling would have to forfeit for his role in the scheme. Prosecutors said a fair amount was the roughly $3.18 million that could be traced to the work he did for Madoff.
In 2009, almost a year after Mr. Madoff surrendered to the federal authorities, Mr. Friehling, who operated out of a storefront office in New City, N.Y., pleaded guilty to one count of securities fraud and three federal tax violations. He began working for Mr. Madoff in 1988, largely inheriting the job from his father-in-law, Jerome Horowitz, who retired from the small auditing firm Friehling & Horowitz in 1991.