NEW YORK - (Mealey's) The former controller of Bernard L.
Madoff Investment Securities LLC (BLMIS) has pleaded guilty to criminal counts
and agreed to cooperate with the U.S. government in its ongoing investigation
into the fraud committed at BLMIS, according to a Dec. 19 press release issued
by U.S. Attorney Preet Bharara (United States of America v. Enrica
Cotellessa-Pitz, No. 10-cr-0228, S.D. N.Y.).
According to the press release, Enrica Cotellessa-Pitz
pleaded guilty to a count of conspiracy, as well as substantive counts of
falsifying books and records of a broker-dealer, falsifying books and records
of an investment adviser and making false filings to the Securities and
Exchange Commission.
Cotellessa-Pitz pleaded guilty before U.S. Judge Laura
Taylor Swain of the Southern District of New York. As part of her plea
agreement, Cotellessa-Pitz has also agreed to cooperate with the government in
its ongoing investigation into the fraud committed at BLMIS, according to the
press release.
Restitution
She faces a statutory maximum sentence of 50 years in
prison and is subject to mandatory restitution and criminal forfeiture and
faces criminal fines "up to twice the gross gain or loss derived from the
offense," according to the press release.
According to the press release, Cotellessa-Pitz has
further agreed to a forfeiture of more than $97 billion. Judge Swain
released her on a $2.5 million bond on the condition that the bond be co-signed
by eight financially responsible individuals and secured by $800,000 in cash
and property. Her travel is restricted to the Eastern and Southern
Districts of New York, and Cotellessa-Pitz has surrendered her passport.
Her sentencing date is set for June 22.
Forfeiture Sought
Judge Swain issued an order on Dec. 20 directing the
government to "determine what property it will seek to have forfeited and
confer promptly with defense counsel to ascertain whether the defense opposes
the forfeiture sought."
Cotellessa-Pitz was employed at BLMIS from 1978 to Dec.
11, 2008, and began serving as BLMIS's controller in 1998.
According to the press release, the government alleged
that "[b]eginning in the 1990s until the collapse of BLMIS in 2008,
Cotellessa-Pitz, allegedly along with other co-conspirators, created false and
misleading entries in the books and records of BLMIS and in reports filed with
the SEC. The false and misleading entries were used to disguise transfers
of funds from the BLMIS Investment Advisory (IA) business to BLMIS's Market
Making and Proprietary Trading operations. The transfers made the Market
Making and Proprietary Trading operations of BLMIS appear profitable when they
were not."
Fraudulent Documents
"In addition, Cotellessa-Pitz, allegedly along with other
co-conspirators, created false and fraudulent documents that were given to the
SEC in connection with its audit of BLMIS. Cotellessa-Pitz, and allegedly
other co-conspirators, also created false and fraudulent documents in
connection with tax audits of Bernard L. Madoff," according to the press
release.
The SEC also charged Cotellessa-Pitz on Dec. 19 with
aiding and abetting a violation of Section 17(a) of the Securities Exchange Act
of 1934 and SEC Rules 17a-3, 17a-4 and 17a-5, as well as Section 204 of the
Investment Advisers Act of 1940 and Rule 204-2 thereunder in connection with
her role in the operation and concealment of the Ponzi scheme.
The complaint was filed in the Southern District of New
York.
Counsel
Bharara, along with Assistant U.S. Attorneys Lisa A.
Baroni, Julian J. Moore, Arlo Devlin-Brown, Barbara A. Ward and Matthew L.
Schwartz, all in New York,
represent the government in the criminal proceedings.
The SEC is represented by Regional Director George S.
Canellos, as well as SEC New York Regional Office staff members Andrew M.
Calamari, Robert J. Burson, Alexander M. Vasileseu, Aaron P. Arnzen and
Kristine M. Zaleskas in New York.
Cotellessa-Pitz is represented in the criminal
proceedings by Timothy J. Treanor of Sidley Austin in New York.
[Editor's Note: Lexis subscribers may download the
document using the link above. The document(s) are also available at www.mealeysonline.com or by
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