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Notable outcomes

Well before Bernard Madoff 's massive Ponzi scheme came to light, observers doubted whether his listed accounting firm – an unknown two-person firm in a rural area north of New York City – was competent to service a multibillion-dollar operation, especially since it had only one active accountant, David G. Friehling. Friehling's practice was so small that for years he operated out of his house; he only moved into an office when Madoff customers wanted to know more about who was auditing his accounts. Ultimately, Friehling admitted to simply rubber-stamping at least 18 years' worth of Madoff's filings with the SEC. He also revealed that he continued to audit Madoff even though he had invested a substantial amount of money with him; accountants are not allowed to audit broker-dealers with whom they are investing. He agreed to forfeit $3.18 million in accounting fees and withdrawals from his account with Madoff. His involvement makes the Madoff scheme not only the largest Ponzi scheme ever uncovered, but the largest accounting fraud in world history. The $64.8 billion claimed to be in Madoff accounts dwarfed the $11 billion fraud at WorldCom.