Enrica Cotellessa-Pitz, the former controller at Ponzi schemer Bernard Madoff’s investment firm, has pleaded guilty to charges of conspiracy, falsifying books and records and making false statements to the Securities and Exchange Commission.

Cotellessa-Pitz, 53, pled guilty before U.S. District Judge Laura Taylor Swain on Monday. As part of her guilty plea, she has agreed to cooperate with the government in its ongoing investigation of the fraud that occurred at Bernard L. Madoff Investment Securities. “I did not know that Madoff and others were stealing investors’ money,” she said as she entered the plea in a federal court in Manhattan, according to the Associated Press. “For that, I am terribly sorry.”

Cotellessa-Pitz worked for Madoff from 1978 through December 11, 2008. She started with the firm while she was a college student and became controller in 1998. Beginning in the late 1990s, until the firm collapsed in 2008, she admitted to creating false and misleading entries with other co-conspirators in the books and records at 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 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. The SEC previously charged BMIS’s director of operations David Bonventre with falsifying books and records to hide and obfuscate Madoff’s advisory operations.

In addition, Cotellessa-Pitz admitted she helped Madoff’s co-conspirators create false and fraudulent documents that were given to the SEC in connection with its audit of BLMIS. Cotellessa-Pitz also admitted to helping create false and fraudulent documents in connection with tax audits of Madoff.

According to the SEC’s complaint against Cotellessa-Pitz, she played a central role in falsifying records as directed by Madoff and Bonventre. Madoff used the false records to artificially improve the firm’s reported revenue and income as well as to deceive regulators who sought to review the firm’s operations and financial results.

The SEC alleges that Madoff instructed employees to transfer hundreds of millions of dollars from bank accounts holding investor funds to the firm’s operating bank accounts. Madoff’s goal was to use stolen investor funds to hide the significant losses incurred by BLMIS’s market-making and proprietary trading operations. Cotellessa-Pitz joined this effort after she was promoted to controller at the firm in 1998, when Madoff and Bonventre instructed her to falsely account for these transfers of investor funds as adjustments to certain securities positions on BLMIS’s stock record.

According to the SEC’s complaint, Cotellessa-Pitz then used the figures to calculate and overstate the trading income purportedly generated by Madoff’s market-making and proprietary trading operations. Cotellessa-Pitz included these bogus figures on BLMIS financial statements, which she then filed with the SEC and other regulators. Cotellessa-Pitz and other BLMIS personnel then falsified documents provided to regulators to obscure the firm’s advisory operations and the transfer of investor funds to the operating bank accounts.

She faces up to 50 years in prison and is also subject to mandatory restitution and criminal forfeiture, along with criminal fines of up to twice the gross gain or loss derived from the offense. She has agreed to forfeiture of more than $97 billion. The net proceeds from the sale of the forfeited property will be used to compensate victims of the fraud.

Following the guilty plea, Judge Swain released Cotellessa-Pitz 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. In addition, her travel is restricted to the Southern and Eastern Districts of New York. She has surrendered her passport. Judge Swain has set a sentencing date of June 22, 2012.

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