Wednesday, 20 August 2014
Last updated 2 hours ago
Nov 22 2011 | 8:34am ET
David L. Kugel, a former senior trader with Bernard L. Madoff Investment Securities, pleaded guilty on Monday in a Manhattan federal court to having helped create fake, backdated trades to defraud BLMIS clients.
Preet Bharara, the U.S. Attorney for the Southern District of New York, said Kugel pleaded guilty today before U.S. District Judge Laura Taylor Swain to two counts of conspiracy, as well as substantive counts of securities fraud, falsifying books and records of a broker-dealer, falsifying books and records of an investment adviser, and bank fraud. In addition to pleading guilty, Kugel agreed to cooperate with the government in its ongoing investigation of the fraud that occurred at BLMIS.
According to documents filed in connection with the case, Kugel was employed at BLMIS from 1970 through Dec. 11, 2008. Beginning in 1970, Kugel was a trader in BLMIS’ proprietary trading and market making operations. In the late 1990s, he assumed a managerial position on the trading floor and later took on the role of “trading floor compliance analyst.”
From the 1970s through the collapse of BLMIS, Kugel provided historical trade information to other BLMIS employees, including Annette Bongiorno and Joann Crupi, which allegedly enabled them to create fake trades. Kugel would provide historical information—stock names, buy and sell dates, price ranges—which could be used to select particular stocks and purchase prices for each IA client to meet a rate of return pre-determined by Madoff.
According to a statement from the FBI, which assisted in the investigation, Kugel’s information often mimicked trades previously executed in connection with BLMIS’s proprietary trading operation.
The fake trades supported Bernie Madoff's $65 billion Ponzi scheme, which came crashing down in December 2008 and for which Madoff is currently serving a 150-year jail sentence.
Kugel also defrauded banks, using false information concerning his assets and the assets of others to obtain loans.
The 66-year-old faces a total statutory maximum sentence of 85 years in prison and has agreed to forfeiture of more than $170 billion, including his interests in homes, a luxury car, various accounts at financial institutions and other specific assets.
Judge Swain released Kugel on a $3 million bond on the condition that the bond be co-signed by six financially responsible individuals and secured by $900,000 in cash and property. In addition, Kugel’s travel is restricted to the Southern and Eastern Districts of New York and the District of New Jersey.
Judge Swain set a sentencing date for Kugel of May 4, 2012.
Aug 4 2014 | 7:42am ET
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The Alpha Pages Editor's Note