David Friehling’s Mea Culpa: Case expands against Madoff Family
David G. Friehling was a former auditor who “worked” on Madoff’s books for the past 17 years.
Mr. Friehling recently pleaded guilty to nine criminal charges carrying a potential prison terms of 114 years. Mr. Friehling will not learn his sentence until next year – why it takes a year to sentence him I am not sure. Until then he is free on $2.5 million bond. Here is a video about the guilty plea:
Mr. Friehling worked under the guise of a three-person accounting firm called Friehling & Horowitz based in New City, NY. So who exactly were Friehling & Horowitz? The firm consisted of one active partner (David Friehling), his retired father-in-law Jerome “Jerry” Horowitz and a secretary. Certainly capable of auditing a purportedly large and complex
hedge fund strategy such as Madoff’s….
David Friehling came from a wealthy family which owned the now abandoned Stevensville Hotel, a Borscht Belt resort in beautiful Swan Lake, New York . Here is an old commercial for the hotel (“the scenic Catskill wonderland that has it all“) which boasts such great headliners as Mel Torme, Foster Brooks and Frankie Avalon:
Here is another video which provides a historical perspective on the Stevensville Hotel:
Friehling was a 1981 graduate of Cornell University, a Certified Public Accountant, and a former president of the 
Rockland chapter of the New York State Society of CPAs (NYSSCPA).
Jerome “Jerry” Horowitz was David Friehling’s father-in-law who had worked for Mrs. Madoff’s father. It seems as if Jerry had been retired to Florida for the past several years, while his son-in-law (Friehling) in New York kept issuing clean bills of health to Madoff’s audits. As if that wasn’t bad enough, Jerry apparently introduced many wealthy Florida residents to Madoff. I’m sure that there is certainly not a conflict of interest for an auditor to raise money for his audit client…
Horowitz passed away from cancer, on March 12th 2009 on the day Madoff pleaded guilty. According to this article, apparently a bit of a scandal existed surrounding his retirement home at Devonshire at PGA National retirement resort. In a poem posted online after his father died, Irwin Horowitz said the Madoff scandal had been a “living nightmare” for h
is family. He said his father’s “reputation for honesty and integrity” has “suffered mightily simply from the association with Mr. Madoff.”
Fortune magazine had an interesting article about how for the past 15 years Friehling & Horowitz told the American Institute of Certified Public Accountants that they didn’t conduct audits… Here is the article: Madoff’s Auditor…Doesn’t Audit.
As part of his guilty plea, Mr. Friehling admitted in federal court that he had produced rubber-stamp audits that
facilitated Madoff concealing his Ponzi scheme for almost 20 years. Additionally Friehling pleaded guilty to three counts of obstructing the administration of federal tax laws. These federal tax charges were added after the original complaint was filed. According to the New York Times, the last minute addition of these charges suggests that perhaps the government is attempting to utilize the information learned from Mr. Friehling to building criminal tax cases against other related to the Madoff scandals, and perhaps even Madoff’s other family members.
Supporting the notions that other Madoff family members may soon be on the chopping block was Mr. Friehling’s acknowledgment that he had prepared tax returns for Madoff and others, but neither he nor the prosecutors would identify those other in open court as yet. This has led to much speculation that perhaps the others are Madoff’s family members.
The Madoff family cast of characters has responded with their usual decline to comment. This list includes Ruth Madoff (via attorney Peter A. Chavkin), sons Andrew and Mark and Bernie’s brother Peter B. Madoff (via attorney John R. Wing). On another note, the Madoff Trustee (Irving Picard) recently sued Andrew, Mark, Peter and Madoff’s niece Shana claiming they used the tainted firm as a “piggy bank“. The suit charges include:
*Peter Madoff the firm’s chief compliance officer, used $4.45 million of company money to buy a Park Ave. apartment and $747,046 to pay off American Express bills for wine and clothes.
* Son Mark siphoned off $6.6 million to buy a home in Nantucket.
* Son Andrew bought a $75,000 membership with the Miami “Lock and Hackle” fly fishing and hunting club and paid off $813,287 American Express bill for clothes, boat rentals and vacations.
* Niece Shana, who earned $3.8 million at the firm, used the firm’s cash to pay off a $379,342 Amex bill for clothes,
makeup and travel.
Here’s a nice chart summarizing Peter Madoff’s background:
Also a note about niece Shana, she apparently has a taste for fashion and loves Cuban-American designer Narciso
Rodriguez. She is also a securities lawyer who is married to a former SEC investigator named Eric Swanson. Shana (like her father Peter) both went to Fordham Law School.
According to this article she recently called a prison consultant named Larry Levine, a former prosecutor who runs a prison consulting firm called Wall Street Prison Consultants, to see how much jail time she might face and how to protect her safety in jail.
It will be interesting to see what information Mr. Friehling has to add to help justify Mr. Picard’s claims against the Madoff family. Maybe he can share a cell with Shana.
Click here to discuss this post.
Horowitz got off lucky. Friehling should still get life in Prison!! Perhaps they jail him here in India – much harsher treatment!
Friehling and his family (including the Horowitz’s) I’m sure are very proud
To me people like Friehling are even more guilty than Madoff – people put their trust in auditors and it was all a lie!
My opinion – Shana knew what was happening but didn’t want to speak up because it may have curbed her shopping sprees.
I used to go to the Stevensville hotel as a child. It was great – a real shame to see what Friehling’s parents hard work has been wasted.
Fordham law schools finest graduates: Madoff’s corrupt brother and his crooked niece. They should both be disbarred!