David G. Friehling (born November 27, 1959[1]) is an American accountant who was arrested and charged in March 2009 for his role in the Madoff investment scandal.
In 2007, Aksia, a hedge fund consultant, warned its clients to stay away from Madoff for that very reason; its CEO, Jim Vos, likened this situation to General Motors being audited by a three-person firm.
[7] Soon after the Madoff scandal broke, it emerged that Friehling & Horowitz had informed the American Institute of Certified Public Accountants in writing since 1993 that it didn't conduct audits.
"[7] Friehling was not registered with the Public Company Accounting Oversight Board, which was created under the Sarbanes-Oxley Act of 2002 to help detect fraud.
[10][12] It later emerged that Madoff's banker, JPMorgan Chase, had known that Friehling wasn't registered with the PCAOB or subject to peer review as early as 2006.
[13] Additionally, officials at Fairfield Greenwich Group, operator of the largest Madoff feeder fund, had been aware as early as 2005 that Friehling was the firm's sole employee.
He agreed to proceed without having the evidence in the criminal case against him reviewed by a grand jury at a hearing before U.S. District Judge Alvin Hellerstein in Manhattan.
[5][15] The guilty plea effectively ended his career as an accountant; the SEC is not allowed to accept audits from convicted felons.
[16][7] Friehling's sentencing was originally set for February 2010, but was postponed several times at the prosecutors' request due to his cooperation with the government's effort to unwind Madoff's crimes.
"[20] Swain accepted the plea terms, but suggested that Friehling be forced to pay part of the overall $130 million forfeiture arising from the fraud.
Swain said that she did not believe Friehling's nonfeasance took place "in a vacuum", and felt the forfeiture was necessary to hold the defendants to account even though it will likely never be repaid in full.