NEW YORK, N.Y. – A longtime trader for Bernard Madoff’s firm was sentenced Wednesday to 10 months of home confinement after his testimony helped convict five former co-workers for their roles in history’s largest Ponzi scheme.
David Kugel, 69, apologized before U.S. District Judge Laura Taylor Swain in Manhattan announced his penalty.
“The guilt, embarrassment and humiliation have become part of my DNA,” Kugel told her. “In my mind, I’ve gone from being an American success story to being an American tragedy.”
He said he cannot look his 96-year-old mother in the eyes and believes his siblings no longer look up to him.
Swain noted that he earned a substantial reduction from the up to 85 years in prison he faced after pleading guilty in 2011 and co-operating.
She also ordered him to perform 200 hours of community service and forfeit $7.17 million for his role in a fraud that cheated thousands of investors out of about $20 billion. A court-appointed trustee has recovered more than half the lost money, much of it from fellow investors who had been paid more in bogus Madoff profits than they had paid into the fraudulent investment business.
Kugel said his life was shattered in December 2008 when his boss revealed he had been running a Ponzi scheme.
When Kugel pleaded guilty to conspiracy and fraud charges, he admitted he helped create fake, backdated trades for Madoff’s private investment business in the 1970s to make it seem as though trading were occurring when no trading took place. He also admitted that he submitted false information to financial institutions from 2002 to 2007 so he and others could obtain mortgages and loans.
He said his priorities in life have changed and he now gets joy from tutoring students in mathematics.
Kugel said he also went against his lawyer’s advice when he decided to co-operate with the government weeks after Madoff’s arrest.
“My co-operation was a step on my road to redemption,” he told Swain.
Assistant U.S. Attorney Randall Jackson said Kugel was one of the most forthcoming co-operators, and his wrongdoing was minimal because he primarily worked for a side of Madoff’s business that did engage in trading, though not for the benefit of the private investors.
At the trial of five former Madoff employees who were convicted last year, Kugel testified that he was willing to invent trades that were printed on statements mailed to Madoff’s customers because he believed Madoff when his boss told him the money was invested in other places.
“I always thought he invested in shopping centres, foreign currencies and other ventures,” Kugel testified. He had worked for Madoff since 1970.
Madoff, 77, is serving a 150-year prison sentence.