Madoff with the Money

Chapter 14. Another Arrest, and Blood Relatives Get Taken to the Cleaners

Despite all the suspicions and investigations and proliferating civil lawsuits, the only other person arrested in the Madoff scandal in the days after Bernie's guilty plea was his accountant, handsome 49-year-old David G. Friehling, who more resembled the character Carlo Rizzi in The Godfather than a nerdy numbers cruncher. But according to prosecutors, Friehling was quite creative.

Amazingly, virtually none of Bernie's thousands of hoodwinked investors, or other financial advisers, ever questioned the fact that the financial messiah in whom they had so much trust, the Wall Street guru whom many begged to take their money, had an accountant who worked out of a dumpy 13-by-18-foot storefront office in a drab strip of offices in the hamlet of New City, across the Hudson River and about 45 minutes from Madoff headquarters.

He was a red flag, if there ever was one.

It was like the equities trader Daryl Montgomery observes—no one questioned or wanted to believe that Bernie was a rotten egg, as long as those beautiful earnings statements arrived in the mail, and extraordinary returns kept coming despite all the warning signs.

For more than a decade, Friehling, of the firm Friehling & Horowitz—Horowitz being Friehling's father-in-law, Jeremy, who had retired to Florida in 1997 and later died of cancer at the age of 80, curiously on the morning Bernie pleaded guilty—handled all of the auditing for Bernie's crooked ...