Madoff auditor admits fraud charge

Bernard Madoff's auditor David Friehling has admitted fraud charges (AP)

Bernard Madoff's auditor has pleaded guilty to fraud charges, admitting failing to verify the disgraced money manager's financial records.

David Friehling, 49, entered the plea in US District Court in Manhattan.

He apologised to the thousands of victims who lost billions of dollars while he audited Madoff's financial records between 1991 and 2008.

The plea was part of a co-operation deal with prosecutors. But Friehling told the court he did not know Madoff was running history's biggest Ponzi scheme.

"In what was the biggest mistake of my life, I put my trust with Bernard Madoff," Friehling told Judge Alvin Hellerstein.

Before he explained his crimes to the judge, he said he wanted to make clear: "At no time was I ever aware Bernard Madoff was engaged in a Ponzi scheme."

He said if he had known that investor money was not properly invested, he would not have poured his family's savings, including the college funds for three children ages 17, 20 and 24, into Madoff's investment business.

But he admitted he took the financial records handed him by Madoff "at face value," failing to independently verify the assets of Madoff's investment company or ensure his bank account records or charts listing the purchase of securities were accurate. He said he also prepared personal tax returns for Madoff that he knew were not accurate.

Friehling's statement was made to support his guilty plea to charges of securities fraud, investment adviser fraud, making false filings with the Securities and Exchange Commission, and obstructing or impeding the administration of the Internal Revenue laws.

The charges carry a potential prison term of up to 114 years in prison, though substantial co-operation with prosecutors can result in significant leniency. Friehling remains free on 2.5 million US dollars (£1.5 million) bail.