New York – A former employee of Bernard Madoff was sentenced to nine months of home detention but no prison time on Wednesday for falsifying documents and other crimes, in light of his extensive cooperation with U.S. authorities investigating Madoff’s multibillion-dollar Ponzi scheme.
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Eric Lipkin was sentenced by U.S. District Judge Laura Taylor Swain in New York, nearly four years after he pleaded guilty to conspiracy, bank fraud and other charges.
The sentencing came one day after another cooperating defendant, former Madoff controller Enrica Cotellessa-Pitz, also avoided prison.
“To be part of the worst financial fraud ever is an embarrassment I’ll have to live with for the rest of my life,” Lipkin told Swain on Wednesday.
Lipkin began working at Bernard L. Madoff Investment Securities as a teenager thanks to his father, Irwin, one of Madoff’s longest-serving employees.
Irwin Lipkin also pleaded guilty in connection with the fraud and is scheduled to be sentenced in July.
Though there was no evidence Eric Lipkin knew of the Ponzi scheme itself, prosecutors said his crimes helped Madoff conceal the fraud’s existence.
As the assistant to Madoff’s deputy Frank DiPascali, Lipkin helped create fake documents for foreign investors and outside auditors, including examiners from the U.S. Securities and Exchange Commission, prosecutors said.
In 2006 and 2007, at Madoff’s behest, Lipkin created forged clearinghouse reports intended to convince potential investigators that the firm held securities it did not, according to the government.
As the firm’s payroll clerk, Lipkin also falsely reported to the U.S. Department of Labor that several friends and relatives of top Madoff employees – including Bernard Madoff’s sister-in-law Marion and his housekeeper in Florida – worked at the firm so they could continue to receive salaries and benefits, prosecutors said.
Lipkin’s illegal activity extended beyond the firm, as well; prosecutors said he and DiPascali created an inflated account statement so he could try to secure a home construction loan.
Prosecutors credited Lipkin with corroborating information provided by DiPascali, who became the government’s star witness at the criminal trial of five former Madoff aides. The aides – back-office director Daniel Bonventre, portfolio managers Annette Bongiorno and Joann Crupi and computer programmers Jerome O’Hara and George Perez – were convicted on all counts last year.
All told, 15 defendants have pleaded guilty or been convicted at trial in connection with the Madoff fraud, which cost investors an estimated $17 billion in lost principal.
The case is U.S. v. Lipkin, U.S. District Court for the Southern District of New York, 10-cr-228.