Bernard Madoff's longtime accountant has been released on US$2.5 million in bail.

The 49-year-old David Friehling was arrested on fraud charges yesterday and accused of helping the disgraced money manager cheat thousands of investors out of billions of dollars.

The accountant was released after a brief hearing Wednesday in federal court in Manhattan.

Helped fool investors

Federal authorities are turning their attention to people they believe helped Madoff fool 4,800 investors into thinking their investments were safe.

Friehling is the first person to be arrested since the Madoff scandal broke three months ago. He faces up to 105 years in prison if convicted.

Friehling ran an accounting office in a nondescript suburban building north of New York City, and quickly drew scrutiny over how he could have not detected the fraud. Experts in accounting also said it would be preposterous for such a tiny firm to properly audit an operation the size of Madoff's.

Owed tens of billions

Prosecutors said Friehling essentially rubber-stamped Madoff's books for 17 years, serving as Madoff's auditor from 1991 through 2008 while he worked as the sole practitioner at Friehling and Horowitz. He was paid a tidy sum by Madoff: Prosecutors said he made between $12,000 and $14,500 a month from 2004 to 2007. That amounts to $144,000 to $174,000 a year.

Authorities said that, if Friehling had done his job, Madoff's financial statements would have shown his company owed tens of billions of dollars to his customers and was insolvent.

Prosecutors said he made between $12,000 and $14,500 a month from 2004 to 2007. That amounts to $144,000 to $174,000 a year.