(Bloomberg News) Craig Kugel, who worked in human resources at con man Bernard Madoff's firm, pleaded guilty to a tax scheme that paid salaries and benefits to people who weren't employees.
Kugel, 38, pleaded guilty today before U.S. District Judge Laura Taylor Swain in New York to three counts of subscribing to false tax returns, one count of conspiracy to obstruct the U.S. Internal Revenue Service and one count of making false statements. He told the judge that he played no role in defrauding investors in Madoff's Ponzi scheme.
Kugel said today that while working for a Madoff unit, he learned some individuals on the payroll weren't employed at Madoff's securities firm, yet he authorized and submitted falsified documents with the U.S. Department of Labor that allowed them to obtain salary and benefits they hadn't earned.
"I am sorry for my lapses in judgment and committing these federal crimes," Kugel told the judge. "I want to make clear that I had nothing to do with the Madoff Ponzi scheme and I was never involved in Madoff trading operations."
Swain said Kugel faces a combined maximum prison term of 19 years and ordered him to forfeit more than $2.3 million he earned as a result of his illegal activities.
Kugel also admitted today that from 2001 to 2008, he charged personal expenses to his corporate credit card.
Kugel is the seventh person to plead guilty in the government's investigation into Madoff's former firm. He is cooperating with the Manhattan U.S. Attorney's Office, Swain said.
David Kugel, who is Craig Kugel's father and a former supervisory trader in Madoff's proprietary trading operation, pleaded guilty in November to aiding the fraud by creating phony backdated trades beginning in the early 1970s and continuing until the fraud collapsed in December 2008. David Kugel pleaded guilty to six criminal counts and is cooperating with authorities.
Frank DiPascali, Madoff's chief financial officer, and former employees Enrica Cotellessa-Pitz and Eric Lipkin, along with Madoff's former accountant David Friehling, also have pleaded guilty and are awaiting sentencing.
Madoff, 74, pleaded guilty in 2009 to orchestrating what prosecutors called the biggest Ponzi scheme in history. He's serving a 150-year sentence in federal prison in North Carolina.
The cases are U.S. v. Kugel, 10-cr-00228, Picard v. Kugel, 11-cv-04227, U.S. District Court, Southern District of New York (Manhattan).