Jailed financier Bernard Madoff’s multibillion-dollar Ponzi scheme stretched back at least to the early 1970s, when his employees used historical information about stocks to create false trades that could be placed on customer statements, a former trader revealed as he pleaded guilty yesterday to criminal charges. David Kugel pleaded guilty in the U.S. District Court for the Southern District to conspiracy, securities fraud, bank fraud, falsifying business records and falsifying the books of an investment adviser, charges that carry a potential penalty of up to 85 years in prison. A cooperation deal with prosecutors that leaves Mr. Kugel free on $3 million bail would earn him leniency at a sentencing tentatively scheduled for May 4. As part of the plea, he agreed to forfeit $3.5 million to the government.
Mr. Kugel, 66, told Judge Laura Taylor Swain that he was engaging in fraud in the private investment wing of Mr. Madoff’s Manhattan-based business in the early 1970s. He said he was “deeply sorry.”
