Madoff Business Partner Arrested

Sep 26 2013 | 11:17am ET

An accountant with close ties to Bernard Madoff was arrested this morning, nearly five years after Madoff's $65 billion Ponzi scheme collapsed.

Paul Konigsberg was arrested by Federal Bureau of Investigation agents at 6 a.m. today, at his lawyers' offices in Manhattan. The arrest followed a refusal by Konigsberg's lawyers to grant prosecutors a tolling agreement in the case, which would have allowed them to charge him after the statute of limitations expires in December, The New York Times reports. He is expected to appear in court later today.

It is unclear what charges Konigsberg will face. Konigsberg is a long-time Madoff friend and business associate who was the only non-family member to serve as a shareholder of Madoff's London business. He also counted many victims of the fraud as clients, and did taxes for two Madoff family foundations. Madoff often referred investors to Konigsberg and his now-defuct accounting firm, Konigsberg Wolf & Co., for tax services.

Konigsberg is the 15th person charged in the case. Nine, including another accountant, have pleaded guilty; five others, all former Madoff employees, go on trial in October.

"Paul Konigsburg, a 77-year-old accountant, is an innocent victim of Bernie Madoff," his lawyer, Reed Brodsky, who prosecuted Galleon Group founder Raj Rajaratnam, said. "He looks forward to clearing his good name at trial."

Konigsberg's arrest is not the first time a Konigsberg Wolf principal has run into trouble over Madoff. Accountant Steven Mendelow settled a Securities and Exchange Commission case accusing him of improperly funneling some $90 million to Madoff in 1993.

Prosecutors are continuing their investigations into Madoff's niece, Shana Madoff Swanson, and into JPMorgan Chase.

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