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Ex-Madoff employee admits faking labor, tax records
June 5, 2012 / 9:17 PM / 5 years ago

Ex-Madoff employee admits faking labor, tax records

NEW YORK, June 5 (Reuters) - While former trader David Kugel was helping conman Bernard Madoff fabricate stock trades, his son Craig Kugel was giving U.S. authorities false information about who worked at the now-defunct Madoff firm.

Craig Kugel, a human resources employee at Bernard L. Madoff Investment Securities LLC (BLMIS) from 2001 until the massive Madoff fraud was revealed in December 2008, pleaded guilty to five criminal charges in U.S. District Court in New York on Tuesday. He is not charged with involvement in the massive Madoff fraud.

But Kugel told the judge that he sent forms to the U.S. Department of Labor about people who were not employed by the firm even though they were on payroll and entitled to benefits. He also admitted to filing false U.S. individual income tax returns.

Last November, his father, David Kugel, pleaded guilty to six criminal charges before the same federal judge, Laura Taylor Swain. He said he and two other longtime Madoff employees, Annette Bongiorno and Joann Crupi, faked records when no trades actually took place. Bongiorno and Crupi have pleaded not guilty to criminal charges.

BLMIS collapsed with the December 2008 arrest of Madoff. The disgraced financier pleaded guilty three months later and is serving a 150-year prison term. He orchestrated a decades-long, multibillion dollar Ponzi scheme in which early investors are paid with the money of new clients.

Craig Kugel, 38, said during his plea proceeding that he sent the employment forms “knowing the numbers were inaccurate and swearing to their truth.” Kugel said he was sorry for his lapse in judgment “but I want to make clear I was never involved in the Madoff Ponzi scheme and never worked in its trading department.”

Kugel also charged more than $200,000 in personal expenses, including luxury clothes, jewelry, and vacations for himself and his family, to a corporate credit card, but did not report it as income on his tax returns, prosecutors said.

The charges carry a maximum possible prison term of 19 years.

The case is USA v Craig Kugel, U.S. District Court for the Southern District of New York, No. 10-228. (Reporting By Grant McCool; Editing by Bernard Orr)

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