Lawyer: Madoff brother demands $500,000 license fee

NEW YORK, April 30 (Reuters) - Bernard Madoff's brother demanded a $500,000 licensing fee for part of the market-making unit of the swindler's firm being sold at auction, a lawyer for the trustee winding down the company said on Thursday.

The issue of the fee request has not been resolved, but the winning bidder at Monday's auction, Boston financial firm Castor Pollux LLC, went ahead with the deal without the licensing agreement, said lawyer Marc Hirschfield.

At a hearing Thursday in U.S. Bankruptcy Court in New York, Judge Burton Lifland said he was willing to approve the auction in which Castor Pollux bid up to $25.5 million [ID:nSP79600].

Hirschfield told reporters after the hearing that Madoff's wife Ruth Madoff, his brother Peter Madoff and others owned PRIMEX LLC, which had the license for the software that enabled Bernard L. Madoff Investment Securities LLC's (BLMIS) brokerage in New York to do electronic trading.

He said the disagreement over the PRIMEX license "won't disrupt the sale of the market-making business." Trustee Irving Picard expects eventually to be able to Bring PRIMEX into the BLMIS estate "and he will grant the license to Castor Pollux down the road."

Peter Madoff made the demand for the fee in the last week when he was asked to sign the agreement that would turn over the unit to the trustee, Hirschfield said.

A lawyer for Peter Madoff could not immediately be reached for comment.

The trustee argues that all the Madoff assets should be recovered to pay former customers of the fraud, the biggest in Wall Street history with as much as $65 billion invested in the past 20 years.

Bernard Madoff, who turned 71 on Wednesday, pleaded guilty