Irwin Lipkin Gets 6 Months in Prison, Ending Bernie Madoff Case

NEW YORK - Irwin Lipkin, one of Bernard Madoff's longest-serving employees, was sentenced to six months in prison on Wednesday for falsifying records that helped the imprisoned fraudster carry out his multibillion-dollar Ponzi scheme.

The sentencing of the 77-year-old Lipkin before U.S. District Judge Laura Taylor Swain in Manhattan marked the end of the criminal case stemming from the fraud, more than six years after Madoff's arrest sent shockwaves through Wall Street.

Lipkin was the Madoff firm's controller, and worked there from 1964 to 1998. He is the last of 15 people who either pleaded guilty or were convicted at trial in connection with the fraud, which cost investors approximately $17 billion in principal.

Madoff, 77, who is serving a 150-year sentence after pleading guilty in 2009 to masterminding the fraud, has always insisted he acted alone.

Prosecutors have conceded that Madoff alone knew the full extent of his deception. Even his deputy, Frank DiPascali, who was intimately involved in the fraud, testified he believed Madoff had hidden assets to cover customers' liabilities almost until the end.

Madoff tearfully confessed to him that he didn't "have any more goddamn money" in the firm's final days, DiPascali said in 2013 while testifying against five former colleagues.

"It was a fraud that lasted for 40-something years; it involved thousands upon thousands of customers."

But prosecutors have used millions of documents and the cooperation of key co-conspirators to prove that while Madoff was the architect, he had plenty of help. The task was complicated by the sheer scope of the fraud and involved poring through countless paper records, since the scheme began before computers were widespread.

"It was a fraud that lasted for 40-something years; it involved thousands upon thousands of customers," said former prosecutor Matthew Schwartz, now a partner at Boies Schiller & Flexner, who helped lead the Madoff investigation. "It was very difficult to know where to start."

Lipkin, who pleaded guilty to falsifying records as the firm's controller, has asked for probation, citing his declining health, while prosecutors have requested prison time.

Five employees took their chances with a jury: back-office director Daniel Bonventre, portfolio managers Annette Bongiorno and JoAnn Crupi and computer programmers George Perez and Jerome O'Hara. They were convicted on securities fraud and other counts in March 2014, following a six-month trial that was one of the longest ever white-collar criminal trials in New York.

In Emails, Madoff Defends His Dead Sons

Lawyers for the five, who are appealing, say they were duped by one of history's greatest con men, just as investors, auditors and regulators were.

"Nobody knew what he was doing," Andrew Frisch, Bonventre's lawyer, told Reuters. "These are uneducated, or thinly educated, functionaries who basically see him as a god."

Image: Booking mug shot of Bernard Madoff
A booking mug shot of Bernard Madoff released to Reuters on March 17, 2009. HANDOUT / Reuters

Those assertions may have helped persuade U.S. District Judge Laura Taylor Swain not to impose lengthy prison terms, instead sentencing them to between 2-1/2 and 10 years. Prosecutors criticized those sentences as too light and have taken the unusual step of appealing.

Besides DiPascali, six defendants cooperated with prosecutors and were rewarded with non-prison sentences. DiPascali died in May before his sentencing.

As part of the criminal investigation, the Justice Department has also recovered $4 billion for victims, including $1.7 billion from Madoff's longtime bank, JPMorgan Chase & Co , as part of a deferred prosecution agreement.

Over the years, there was speculation as to whether the government would expand its criminal case to others, including major Madoff clients and other firm employees.

Last year, Reuters reported that prosecutors were still considering a case against Madoff's son, Andrew. He died of cancer a few months later. Madoff's other son, Mark, committed suicide on the second anniversary of his father's arrest. No Madoff customer was ever criminally charged.

In 2010, Irving Picard, the trustee seeking to recover victims' funds, and prosecutors reached a $7 billion civil settlement with the estate of Madoff client Jeffry Picower, who died in 2009. Picard has recouped more than $10 billion and is still pressing civil claims against members of the Madoff family and other parties.

Reuters has compiled a complete list of the defendants and their sentences.