Madoff brother agreed to US asset freeze in Dec.

NEW YORK, March 31 Tue Mar 31, 2009 2:51pm EDT

NEW YORK, March 31 (Reuters) - Peter Madoff, the brother of jailed swindler Bernard Madoff and an executive in his firm, agreed with U.S. authorities in December to freeze his assets, a court was told on Tuesday.

The disclosure was made in a New York State appeals court, said Steven Schlesinger, lawyer for a student who won a court order on March 25 temporarily freezing Peter Madoff's assets in a lawsuit over $478,000 in inheritance money said to have been lost in the massive Madoff fraud [ID: nN25293664].

A judge on Tuesday denied an appeal by Peter Madoff's lawyers to lift the freeze. Lawyers for Madoff could not immediately be reached for comment.

Schlesinger said he was shown a U.S. Justice Department order freezing Peter Madoff's assets and dated Dec. 24, nearly two weeks after Bernard Madoff's Dec. 12 arrest. Under the agreement, Peter Madoff, 63, was allowed $10,000 a month to make mortgage payments and for other expenses.

A spokeswoman for the office of the U.S. Attorney in Manhattan, which is investigating Bernard L. Madoff Investment Securities LLC, declined to comment. Peter Madoff was the company's compliance officer. He has not been charged with any wrongdoing by prosecutors or regulators.

A previously scheduled hearing in the civil lawsuit against Madoff's brother is scheduled to go ahead on April 3 in State Supreme Court in Nassau County on New York's Long Island.

Bernard Madoff, 70, pleaded guilty on March 12 to running the biggest investment fraud in Wall Street history, which prosecutors have said involved as much as $65 billion. He was jailed pending sentencing in June.

Brooklyn law school student Andrew Ross Samuels, 22, said in court papers he lost inheritance money that had been entrusted by his grandfather to Peter Madoff, who invested it in Bernard Madoff's scheme.

The lawsuit charged that Peter Madoff "as chief compliance officer and senior managing director of BMIS had full knowledge that it was a fraudulent Ponzi scheme and nothing more than an unprecedented fraud."

Bernard Madoff confessed in court that he ran a classic Ponzi scheme, in which early investors were paid with money from new clients.

The case is Andrew Ross Samuels v Peter B. Madoff 09-5534 the Supreme Court of the State of New York, County of Nassau (Reporting by Grant McCool, editing by Gerald E. McCormick)