(Reuters) — A former accountant for Bernard Madoff has been indicted on charges he helped the convicted swindler defraud thousands of customers in the Ponzi scheme masterminded by Madoff, nearly five years after the fraud was uncovered.

Paul Konigsberg, the former accountant and a former senior tax partner at Konigsberg Wolf & Co. in New York, was arrested on Thursday and charged with two counts of conspiracy and three counts of falsifying records and statements. The U.S. Securities and Exchange Commission filed related civil charges.

Mr. Konigsberg, 77, with matted gray hair and wearing a blue button-down shirt and gray slacks, pleaded not guilty in a brief afternoon appearance before U.S. Magistrate Judge Debra Freeman in Manhattan.

He was freed on $2 million bond with restricted travel. Mr. Konigsberg, a Greenwich, Conn., resident, hugged his brother after leaving the courtroom. The defendant faces up to 40 years in prison, plus fines and other financial penalties.

Mr. Konigsberg is the 15th individual to be criminally charged over the fraud centered at Bernard L. Madoff Investment Securities L.L.C. The trustee liquidating the firm has estimated that investors lost about $17.3 billion of principal.

"Paul Konigsberg threw aside his ethical duties as an accountant in favor of his role as a false bookkeeper, which included allegedly participating in a scheme of backdating client account statements to show fictitious trades and conjuring profits and losses of millions of dollars," U.S. Attorney Preet Bharara in Manhattan said in a statement."

Reed Brodsky, a lawyer for Mr. Konigsberg, said his client was also a victim of Madoff's fraud, with Mr. Konigsberg's family having lost $10 million.

%%BREAK%%

"For a number of months, we've tried to demonstrate to the federal authorities that Mr. Konigsberg has committed no crime," Mr. Brodsky said outside the courthouse after the hearing. "He is a victim of a sociopath — Bernie Madoff."

Federal prosecutors announced the charges less than three months before a five-year statute of limitations runs out for them to bring securities charges tied to Mr. Madoff's scheme.

The latest charges were revealed 11 days before the start of a trial of five former Madoff employees also accused of aiding the fraud by their former boss.

Mr. Madoff, 75, was arrested on Dec. 12, 2008. He pleaded guilty three months later and is serving a 150-year prison term.

According to the indictment, Mr. Madoff directed more than 300 accounts to Mr. Konigsberg, who along with top Madoff lieutenant Frank DiPascali manipulated trades, including through back-dating, to make customers appear to be getting the steady investment returns they had been promised.

Mr. Konigsberg was also accused of concealing the fraud by helping Madoff arrange for customers to receive "amended" account statements that contained false trading activity.

In one such instance, Mr. Madoff in 2008 supposedly backdated losing trades to recoup $1.6 million from a customer, and arranged to have Konigsberg, who had received duplicate account statements, return them so they could be amended.

One Madoff employee supposedly noted: "Corrected statements. Keep in hanging folder. Do not mail out! We never received his original statement back (from the client). He told Bernie he sends everything to Paul & Paul told Bernie he shreds whatever he doesn't need!"

%%BREAK%%

Mr. Konigsberg was also accused of arranging a job with Madoff for a relative who collected more than $320,000 between 1992 and 2008 without having to show up for work.

Mr. DiPascali is among the nine people to plead guilty to criminal charges related to Madoff. He has won repeated praise from prosecutors for his cooperation with the investigation.

Mr. Brodsky, a partner at Gibson, Dunn & Crutcher L.L.P., at the hearing called the prosecution's case "weak" and considerably dependent on Mr. DiPascali, who he said has had "a long pattern of deception for decades."

Before entering private practice, Mr. Brodsky was the lead federal prosecutor who in 2011 won the conviction of Galleon Group hedge fund founder Raj Rajaratnam for insider trading.

According to court papers, Mr. Konigsberg had been close to Mr. Madoff since at least the 1980s, and owned nonvoting shares in a London-based operation, Madoff Securities International Ltd.

In March 2009, U.S. prosecutors accused Mr. Madoff of using the London operation to launder money. Thursday's indictment does not reference those allegations.

Among the others to plead guilty in connection with Mr. Madoff's fraud are Bernard Madoff himself; his brother Peter Madoff, who was sentenced to 10 years in prison; and former accountant David Friehling, who is also cooperating with prosecutors.

The five former Madoff employees who pleaded not guilty are Annette Bongiorno, Daniel Bonventre, Joann Crupi, Jerome O'Hara and George Perez. Their trial is scheduled to begin on Oct. 7.

The case is U.S. v. Konigsberg, U.S. District Court, Southern District of New York, No. 10-cr-00228.