Craig Kugel, a former employee of Bernard L. Madoff Investment Securities LLC, pled guilty to tax fraud and making false statements on June 5 in Manhattan federal court. Kugel, 38, now faces a maximum 19 years in prison. He is also subject to mandatory restitution and criminal forfeiture, and to criminal fines. According to an agreement between Kugel and the government, he will forfeit at least $2.3 million.
According to court documents, Kugel, whose duties at Madoff’s company included overseeing employee benefits and human resource record keeping, gave salaries and benefits to individuals who were not actually employed by the company. He created fraudulent records for these individuals, and was responsible for submitting annual return forms to the government, on which he knowingly included a number of fake employees.
According to the Wall Street Journal, prosecutors alleged that the wife of a Madoff employee, was among those people who were paid, but who did not really work at the firm. This could possibly be the wife of Peter Madoff, Bernard Madoff’s brother. In a 2010 lawsuit, Irving Picard, the trustee seeking to recover funds on behalf of Mr. Madoff’s victims, alleged that Peter Madoff’s wife was paid a total of $1.57 million between 1996 and 2008 for an unspecified “managerial position” at the firm.
“There is no indication that Mrs. Madoff ever performed any services for or provided any value to the Company in exchange for the salary and the benefits she received,” Mr. Picard claimed.
Kugel also pled guilty to having charged $200,000 in personal expenses during his time at Madoff’s firm. He did not report these corporate American Express card charges for luxury clothes, jewelry, and vacations for himself and his family on his income tax returns.
Five other former Madoff employees are facing similar criminal charges, and they all deny any wrongdoing.
Kugel is the son of former Madoff trader David Kugel, who pled guilty to six counts of securities fraud, bank fraud and conspiracy in November 2011. The elder Kugel, 66, admitted to having created fake, backdated trading records for Madoff as far back as the early 1970s.
The son was quick to distance himself from the infamous Madoff Ponzi scheme. “I am sorry for my lapses in judgment in committing these federal crimes, but I want to make clear I had nothing to do with the Madoff Ponzi scheme and I was never involved in the Madoff trading operation,” he said at a hearing in US District Court.