Risk & Compliance

What Does Madoff’s Auditor Say? No Answer

Small firm is being investigated by the Rockland County, N.Y., district attorney.
Stephen TaubDecember 15, 2008

The tiny auditor of Bernard Madoff’s Wall Street firm, at the center of an alleged $50-billion Ponzi scheme, is being investigated by the district attorney in a New York City suburb.

Friehling & Horowitz had signed off on the annual financial statement for Bernard L. Madoff Investment Securities LLC, according to Bloomberg News.

CFO.com’s calls to the auditing firm’s headquarters in New City, N.Y., were not answered yesterday.

“We’re trying to determine if there have been any state crimes here,” Rockland County District Attorney Thomas Zugibe told Bloomberg in a telephone interview. “When you have a key player like that operating in your county, you have to look.”

Hedge fund investment adviser Aksia LLC warned clients last year not to put their money with Madoff after learning of a number of “red flags,” including that the auditor had only three employees, the news service said. Citing Aksia, Bloomberg noted that Friehling & Horowitz included one partner in his late 70s who lives in Florida, a secretary, and one active accountant.

The accounting firm’s office is a storefront in the Georgetown Office Plaza in New City, situated between a pediatrician’s office and another medical office, according to the news service. Friehling sits on the board of the JCC Rockland, a Jewish community center, and is a past president and a current board member of the Rockland chapter of the New York State Society of Certified Public Accountants.

The wire service noted that a four-page annual financial statement, dated Dec. 18, 2006, stated the financial statements of Madoff’s securities firm were “in conformity with accounting principles generally accepted in the United States.”

Zugibe told Bloomberg that he was also looking into whether any other Rockland-based businesses or other organizations might be affected.

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