Second Ex-Madoff Employee Avoids Prison for Role in Fraud

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Bernard Madoff
Bernard Madoff, founder of Bernard L. Madoff Investment Securities LLC. Photographer: Jin Lee/Bloomberg

A second Bernard Madoff employee avoided prison for his role in the con man’s $17.5 billion Ponzi scheme after helping prosecutors convict former colleagues who took their chances at trial.

Eric Lipkin was sentenced Wednesday to nine months of home detention, two years of probation and 200 hours of community service by U.S. District Judge Laura Taylor Swain in Manhattan. On Tuesday Swain gave former Madoff controller Enrica Cotellessa-Pitz a similar sentence.

Lipkin was a payroll clerk and longtime assistant to Madoff’s late chief financial officer, Frank DiPascali. He faced as long as 70 years behind bars for helping create fake trades to put on customer account statements.

He pleaded guilty in 2011 to falsifying documents and paying people for no-show jobs. He has said he didn’t know about the Ponzi scheme or that no trading was taking place.

Lipkin “assisted one of the masterminds of the fraud,” Swain said, referring to DiPascali.

Even so, he provided the government with “extensive” aid in the case, the judge said.

Lipkin began working at Madoff’s firm as a teenager. He did part-time clerical work for his father, Irwin, who was its first employee.

Madoff “brought in young people to work for him who didn’t know any better,” James Filan, Lipkin’s lawyer, said at Wednesday’s sentencing. He said Lipkin was “devastated when he realized this was all a fraud.”

Account, Bonus

Eric Lipkin moved to a full-time job in 1992 and was eventually paid $225,000 a year. Prosecutors said he had $2 million in a personal investment account and received large bonuses “for his assistance on projects designed to mislead auditors and examiners.”

“To be part of the biggest financial fraud ever is an embarrassment I will live with for the rest of my life,” Lipkin said in court before the sentence was handed down. He apologized to victims, adding “I cannot change the past.”

He now works at a sporting goods outlet store earning $10.50 an hour stocking shelves, Filan said.

His father, Irwin Lipkin, also pleaded guilty, admitting in 2012 to falsifying books and records while claiming he didn’t know about the Ponzi scheme. His sentencing has been delayed because he’s ill.

Dad’s Office

The younger Lipkin remembers visiting Madoff’s offices with his father when he was 5 years old. He began the part-time work at 15.

His relationship with his 76-year-old father is now strained, though he still visits him in the hospital, the lawyer said.

Five of Madoff’s top aides were convicted in March 2014 after a trial that lasted five months.

DiPascali, who also pleaded guilty and was the government’s star witness at trial, died of lung cancer this month before being sentenced.

Cotellessa-Pitz, who also assisted in the prosecution of her former colleagues, on Tuesday received two years of probation and 250 hours of community service.

Madoff, who pleaded guilty in 2009 and refused to help prosecutors, was sentenced to 150 years in prison.

The case is U.S. v. O’Hara, 10-cr-00228, U.S. District Court, Southern District of New York (Manhattan).

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