NEW YORK (Reuters) - An accountant for jailed swindler Bernard Madoff was charged with fraud on Wednesday for failing to conduct audits in what was the biggest investment fraud on Wall Street.
U.S. prosecutors filed criminal charges against accountant David Friehling, and the U.S. Securities and Exchange Commission levelled civil charges against Friehling, 49, the first person to be prosecuted other than Madoff, a former chairman of the Nasdaq stock market.
The SEC alleged that Friehling's fraud ran from 1991 to 2008 and that he "essentially sold his licence to Madoff for more than 17 years while Madoff's Ponzi scheme went undetected." In a Ponzi scheme, early investors are paid with money from new clients.
Madoff, 70, pleaded guilty on March 12 in a dramatic courtroom admission of running a worldwide fraud that prosecutors said went back at least 20 years, drawing in as much as $65 billion (46 billion pound). He was immediately jailed and could be imprisoned for the rest of his life when he is sentenced in June.
The criminal charges announced by U.S. prosecutors on Wednesday included securities fraud, aiding and abetting investment adviser fraud and false audit reports. Friehling surrendered to the FBI on Wednesday and was expected to appear in court later.
"Simply put, Friehling failed to do his job and lied to investors and regulators in saying he did," the office of the U.S. Attorney in Manhattan said in a statement.
His attorney could not be reached immediately for comment.
(Reporting by Grant McCool; editing by Jeffrey Benkoe)