Prosecutors: Madoff’s Ponzi scheme started 20 years earlier

A former trader at Bernard Madoff Investment and long-time colleague is expected to plead guilty to fraud Monday and testify that Madoff’s $65 billion Ponzi scheme may have started 20 years earlier than what his ex-boss claimed, the Guardian reported. 

David Kugel, who began working for Madoff in 1970, is cooperating with investigators and is expected to plead guilty in the hopes of lighter sentence, federal prosecutors said in a letter Wednesday. He is charged with conspiring to commit fraud, falsifying records and faking trades.

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Kugel will be the fourth former employee of Madoff to plead guilty to fraud. The New York Times writes:

“Given how small the Madoff firm was in the early 1970s, Mr. Kugel could be a significant witness for prosecutors as they continue their investigation…John R. Wing, a lawyer for Peter Madoff, said he had been unaware of Mr. Kugel’s apparent cooperation with the government and repeated that his client had no knowledge of the Madoff fraud…”

The prosecutors wrote in the letter that Kugel was "beginning in the early 1970s through December 2008 to commit securities fraud, falsify records of a broker dealer, and falsify records of an investment adviser." The comment comes after Madoff testified he began his Ponzi scheme in 2001.

Madoff pleaded guilty to 11 federal felonies in March 2009 and was later sentenced to 150 years in prison.

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