Judge Loosens Grip on Some Madoff Assets, Trustee Set To Assume Control of Companies

Bernard Madoff, the New York City money manager accused of running a $50 billion investment fraud, wants a judge to allow him and his wife to retain their $7 million Manhattan penthouse apartment, $62 million in cash, and other property as part of the federal investigation into the alleged fraud.

Meanwhile, an attorney appointed as trustee over Madoff’s vast financial holdings during the probe wants the same judge to give him control over Madoff’s trading firms and personal property, including artwork and season tickets to the New York Mets.

Madoff, a former chairman of Nasdaq and a well-known investment advisor, was arrested in December 2008 and accused of orchestrating a massive scheme to defraud investors. Investigators say there is no evidence that client funds were ever used to purchase securities and that Madoff is suspected of pocketing billions in investor dollars.

Madoff’s entire empire was a Ponzi scheme, in which early investors were paid with funds collected from newer investors, according to investigators.

Madoff Seeks to Retain Some Property

In documents filed in U.S. District Court in Manhattan, attorneys for Madoff have argued that the Manhattan apartment and cash held in various accounts were unrelated to the alleged fraud. While no ruling has been made regarding those assets, the judge has partially lifted a freeze on some Madoff assets, which could allow Madoff to further cooperate with the investigation into his business dealings, officials said.

Trustee Seeks Control Over Madoff Business Assets

Irving Picard, the New York lawyer appointed as trustee in the Madoff case, has asked the judge to give him control over Madoff’s former firm, Bernard L. Madoff Investment Securities LLC, and an associated firm, called Primex Holdings LLC. The judge is expected to grant the trustee’s request in the coming days.

Picard would gain ownership of the firms, including all their holdings right down to the furniture, computers, and real estate. Investigators are most interested in the contents of various storage units containing thousands of unmarked boxes of documents from Madoff’s firms.

The search for assets stolen from clients is continuing. In February 2009, Picard said that he had recovered $964.4 million for customers. So far, more than 2,300 former Madoff clients have filed claims for reimbursement with the Securities Investor Protection Corp, a fund established by Congress in 1970 to repay investors who lose money in failed brokerages.

A timeline for when defrauded Madoff investors might recover their money, if at all, has not been announced.

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