George Canellos, Director of the SEC New York Regional Office, announced the latest settlement in the Commission's Madoff Ponzi scheme investigation.  Eric Lipkin, a longtime employee at Bernard L. Madoff Investment Securities LLC (BMIS), agreed to settle SEC charges that he helped Bernie & Company to deceive and defraud investors and regulators about the massive Ponzi scheme.

“Eric Lipkin helped create the detailed and entirely phony trading and business records that contributed to the success of Madoff’s fraud.” 

SEC Files Complaint.   The SEC alleges that, for more than a decade, Lipkin helped Madoff defraud investors and mislead auditors and regulators about Madoff’s fraudulent, multi-billion dollar advisory operations.  Among his responsibilities, Lipkin reportedly:

• processed payroll records for “no-show” employees;
• falsified records of investors’ account holdings;
• helped execute the entirely fictitious investment strategy;
• helped Madoff deceive regulators by preparing fake DTCC reports showing the sham investments for clients.

For his efforts, Lipkin received annual bonuses from the firm, including for his work to mislead auditors and examiners, and he received $720,000 from Madoff to purchase a house, an amount he never paid back.

Settlement Terms.   While not admitting or denying the allegations, Lipkin agreed to be disgorged of ill-gotten gains and to pay a fine in an amount to be determined by the court at a later time.  He accepted SEC findings that he violated Section 17(a) [ '33 Act ];  violated and aided and abetted violations of Section 10(b) and violated Rule 10b-5 [ '34 Act ];  aided and abetted violations of Sections 204, 206(1) and 206(2), and Rule 204-2 [IA Act of 1940 ];  violated Sections 15(c) and 17(a), Rules 10b-3 and 17a-3 ['34 Act ] .

SEC Staff Credits.   Kristine Zaleskas, Aaron Arnzen (NYRO) conducted the investigation.  And of course, the SEC’s investigation continues.   [SEC PR 11-119, 6/6/11]

For further details, go to:  SEC Compliant No. 11cv3826, 6/6/11]