Madoff had $173 million in checks ready, U.S. says

NEW YORK Thu Jan 8, 2009 6:04pm EST

Bernard Madoff is escorted from Federal Court in New York January 5, 2009. REUTERS/Lucas Jackson

Bernard Madoff is escorted from Federal Court in New York January 5, 2009.

Credit: Reuters/Lucas Jackson

NEW YORK (Reuters) - Accused swindler Bernard Madoff had signed checks totaling more than $173 million in his office desk ready to be sent out before his arrest, U.S. prosecutors said in court papers on Thursday asking a judge to jail him.

Prosecutors have said the checks were found by investigators searching Madoff's New York City office and that they showed the 70-year-old investment adviser wanted to move money to relatives and friends before his alleged fraud became known to authorities.

The government's written brief did not say whose names were on the checks.

One of Madoff's lawyers, Daniel Horwitz, declined to comment on the claim by prosecutors, who are asking a judge to revoke Madoff's $10 million bail and send him to jail.

A clerk for Magistrate Judge Ronald Ellis of U.S. District Court in Manhattan said the judge would decide on the government's request on Friday or Monday.

In a hearing on Monday and in court papers on Wednesday, prosecutors said Madoff and his wife had mailed more than $1 million worth of jewelry and watches to friends and family in late December in violation of a December 18 court order freezing his assets. They said he was trying to disperse his assets and that he was a flight risk.

Prosecutors said Madoff's lawyers' brief to the court on Wednesday failed to mention part of the December 11 criminal complaint in which Madoff was quoted as saying he wanted to transfer $200 million to $300 million of his investors' remaining assets to selected family and friends.

"In fact, when the defendant's office desk was searched, investigators found approximately 100 signed checks totaling more than approximately $173 million, ready to be sent out," the government's brief on Thursday said, providing new information from the investigation.

Madoff is under house arrest and 24-hour surveillance at his luxury Manhattan apartment after authorities said he confessed to running a $50 billion Ponzi scheme over many years. He is charged with securities fraud but has not appeared in court to answer the criminal complaint.

A Ponzi scheme is one in which early investors are paid off with money from later investors.

Madoff's mailing of jewelry and watches in late December "demonstrates a continuing intention to benefit those close to him to the detriment of victims," the government said in Thursday's court papers.

Horwitz and his legal partner, Ira Sorkin, had argued to the court that the valuables were "sentimental personal items", and that Madoff did not realize that mailing them violated the court order.

Lawyers for investors suing to recover losses welcomed the government's attempt to put Madoff behind bars.

"It should have been done from the first day," said Howard Kleinhendler, attorney for an investor who placed $10 million with Madoff's firm days before his December 11 arrest. "Madoff should not be able to communicate with anyone from his apartment in an unrestricted way."

In a similar lawsuit filed on Wednesday in U.S. Bankruptcy Court in New York, another Kleinhendler client, Hadleigh Holdings LLC of Miami, sought to recover $1 million wired three days before the scandal broke. It sued the trustee overseeing the liquidation of Madoff's firm and JP Morgan Chase Bank to have the full amount returned.

The bank declined comment.

On Thursday in U.S. District Court in Manhattan, the Pacific West Health Medical Center Inc Employees Retirement Trust sued Fairfield Greenwich Group, a hedge fund exposed to the tune of $7.5 billion with Madoff. The lawsuit is one of several that investors have filed against Fairfield and other funds seeking to recover their losses.

(Additional reporting by Edith Honan; Editing by Toni Reinhold)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.