The SEC has charged the auditors of Bernard Madoff's broker-dealer firm with fraud for allegedly conducting fake audits and has vowed to go after other accomplices.
According to the SEC complaint, from 1991 through 2008, certified public accountant David G. Friehling and his firm, Friehling & Horowitz, CPAs, P.C. purported to audit financial statements and disclosures of Bernard L. Madoff Investment Securities LLC. The commission previously charged Madoff and BMIS with committing securities fraud through a multi-billion dollar Ponzi scheme perpetrated on advisory and brokerage customers of his firm.
The SEC's complaint alleged that Friehling enabled Madoff's Ponzi scheme by falsely stating, in annual audit reports, that F&H audited BMIS financial statements pursuant to Generally Accepted Auditing Standards including the requirements to maintain auditor independence and perform audit procedures regarding custody of securities.
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"As the new chairman, I will ensure that we continue this investigation and hold accountable all those who helped to facilitate this massive fraud," said SEC Chairman Mary Schapiro, who took office in January.
Madoff recently pled guilty to several counts of fraud in a $65 billion Ponzi scheme. Currently in jail awaiting sentencing, he is facing up to 150 years in prison.
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