Bernie Madoff
Bernard Madoff exits the Manhattan federal court house in New York in this January 14, 2009 file photo. JPMorgan Chase & Co has agreed to settle two private lawsuits stemming from its relationship with convicted Ponzi schemer Bernard Madoff, according to a court filing on January 7, 2014. The bank will pay $218m to resolve a class-action suit and $325m to resolve claims by Irving Picard, the trustee liquidating Bernard L. Madoff Investment Securities LLC, the filing in Manhattan federal court shows.REUTERS/Brendan McDermid/Files

A third former employee for notorious Ponzi schemer Bernard Madoff has avoided serving a lengthy prison sentence by helping the prosecutors against his former colleagues.

According to Bloomberg News, David Kugel faced as much as 85 years in prison for his role in the $17.5bn (£11.4bn) Ponzi scheme that was uncovered on 11 December 2008. Kruger was a trader in Madoff's brokerage firm for nearly 40 years.

The former Madoff employee was instead sentenced by US District Judge Laura Taylor Swain to two years of probation, which included 10 months of home detention, and 200 hours of community service.

Kugel was the first witness in the five-month trial that convicted five of Madoff's former top aides, according to Bloomberg. During the trial, Kugel admitted he was involved in the creation of fake trading documents but said he did not know customer money was being taken.

In court on 27 May, his lawyer Patrick Joyce said: "Kugel at no time had any idea there was a Ponzi scheme going on — that people were losing millions of dollars. He was never part of the inner circle, the people who knew how bad the world was being treated."

Swain cited Kugel's co-operation in the investigation and his outing of his own son Craig, who also worked for Madoff, for the lenient sentence, Bloomberg reported.

Craig Kugel, who worked as a human resources employee, pleaded guilty to his role in the Ponzi scheme and admitted to tax fraud. He is set to be sentenced on 28 May by the same court that sentenced his father.

In a prepared statement before the sentence was released, the elder Kugel said: "The guilt, embarrassment and humiliation have become part of my DNA". The 69-year-old added that witnessing his son get involved in the crime "is punishment I cannot describe".

Two other former Madoff employees received similar sentences as Kugel. Former payroll clerk and assistant to Madoff's late chief financial officer, Frank DiPascali, was sentenced to two years of probation, with nine months of home detention, and 200 hours of community service. Erica Cotellessa-Pitz, a former Madoff controller, also aided prosecutors and received a similar sentence.