Bernie Madoff’s brother, Peter Madoff, pled guilty in Manhattan federal court, and was also charged by the U.S. Securities and Exchange Commission (SEC), for his role in the massive Ponzi scheme uncovered at Bernard L. Madoff Investment Securities LLC (BMIS).

The U.S. Attorney’s Office for the Southern District of New York announced that Peter Madoff, who was chief compliance officer and senior managing director at BMIS, pled guilty Friday to a two-count indictment charging him with, among other things, conspiracy to commit securities fraud, tax fraud, mail fraud, and falsifying the records of an investment advisor.

At the same time, the SEC announced that it has charged Madoff with fraud, making false statements to regulators, and falsifying books and records in order to create the false appearance of a functioning compliance program. The SEC’s allegations have yet to be proven.

The authorities charge that Madoff created stacks of compliance documents setting out supposedly robust supervisory policies and procedures, but that none of these policies and procedures were ever implemented, and none of the compliance reviews were actually performed. It also says that he created false registration applications, falsified books and records, and helped his brother distribute the firm’s remaining money to family and friends when it became clear that the firm was about to collapse.

Madoff, 66, now faces a statutory maximum sentence of 10 years in prison, and under his plea agreement has promised not to seek a sentence of other than 10 years in prison. He has also agreed to the forfeiture of all of his assets. And, the government has entered into a settlement with his family that requires the forfeiture of all of his wife’s and daughter’s assets, and assets belonging to other family members. His wife is being left with approximately US$771,733 to live on for the rest of her life. Sentencing is set for October 4.

U.S. attorney, Preet Bharara, said, “Peter Madoff enabled the largest fraud in human history. He will now be jailed well into old age, and he will forfeit virtually every penny he has. We are not yet finished calling to account everyone responsible for the epic fraud of Bernard Madoff and the epic pain of his many victims.”

“Peter Madoff helped Bernie Madoff create the image of a functioning compliance program purportedly overseen by sophisticated financial professionals,” said Robert Khuzami, director of the SEC’s division of enforcement. “Tragically, the image was merely an illusion supported by Peter’s sham paperwork and false filings for which he was rewarded with tens of millions of dollars in stolen investor funds.”