First person arrested in the Madoff’s case

On Wednesday one more person was charged with the fraud in the Ponzi investment scheme run by Bernard Madoff. Authorities said that an accountant for the Madoff company David Friehling, 49, who ran a small storefront firm in a New York suburb, pretended to audit the company while the SEC said in its complaint that Friehling and his firm "did not perform anything remotely resembling an audit" of Madoff's money management firm or try to confirm that stocks that Madoff had purportedly bought for customers even existed.

Friehling became the first person to be arrested on criminal charges in the fraud in line with the government’s promise to investigate Madoff's close associates. Friehling was released on $2.5 million bail but a judge ordered him to surrender his passport. The accountant faces a maximum of 105 years in prison on the criminal charges, including securities fraud, aiding and abetting investment adviser fraud and false audit reports.

According to the SEC’s statement Friehling "merely pretended" to conduct minimal audit procedures so as to keep up appearances of auditing. But even then he didn’t adequately document his findings, says the watchdog. The SEC claims that Friehling and his firm were paid from Madoff's dirty earnings and besides he and his family had accounts at the Madoff’s company with total balances of more than $14 million as of November 30, 2008, which was in breach of accounting regulation. Authorities report that over the years millions of dollars were withdrawn from the accounts.

Still, Friehling is not accused of knowing about Madoff's Ponzi scheme, he is charged of deception which led to the illusion that Mr. Madoff legitimately invested his clients' money.