UPDATE 1-Madoff brother subject of criminal probe -lawyer

* Peter Madoff under investigation, but not charged

* Former chief compliance officer for defunct Madoff firm

* Blanket invocation of Fifth Amendment in deposition (Adds quotes from court filings on Peter Madoff's Nov. 12 deposition)

By Grant McCool

NEW YORK, Jan 27 (Reuters) - Peter Madoff, the brother of imprisoned swindler Bernard Madoff and a former executive at the Madoff firm, is the subject of a criminal investigation by U.S. prosecutors, his lawyer said in a civil lawsuit.

Although expected, given Peter Madoff's decades-long involvement with Bernard L. Madoff Investment Securities LLC, word of the criminal probe came in a lawsuit brought in U.S. District Court in Newark, New Jersey, by the charitable foundation of U.S. Senator Frank Lautenberg.

"The USAO has informed us that Peter Madoff is a 'subject' of its criminal investigation," his attorney Charles Spada said in a letter dated Jan. 26 to U.S. District Court Judge Madeline Cox Arleo, who is presiding over The Lautenberg Foundation litigation against Peter Madoff.

Peter Madoff was the compliance officer for the firm in New York and held an executive post with Madoff Securities International Ltd in London.

One court filing showed that in a deposition on Nov. 12, Madoff made a blanket invocation of his Fifth Amendment constitutional right against self-incrimination, even for basic questions such as where he lived and his age.

Bernard Madoff, 71, is serving a 150-year prison sentence in North Carolina after pleading guilty in March last year to a massive, worldwide investment fraud of as much as $65 billion. Thousands of big and small investors, and charities, lost money in the Ponzi scheme, one in which early investors are paid with the money of new clients.

The Lautenberg foundation sued Peter Madoff in the New Jersey court last year for losses suffered in the fraud, described by prosecutors as the biggest investment swindle in U.S. history.

Spada wrote in response to a letter to the judge by foundation lawyer Ronald Riccio, who deposed Madoff on Nov. 12. Riccio argued that Madoff invoked the Fifth in contravention of the judge's orders.

He cited such questions as: "Where do you live, Mr Madoff?" "Are you 63 years old?" and "Are you Bernard Madoff's brother?" to which Madoff consistently replied "same answer."

The office of the Manhattan U.S. Attorney has a policy of neither confirming nor denying the existence of criminal investigations until it is ready to announce charges. A spokeswoman for the office declined to comment on the New Jersey court filing.

In a lawsuit last October, the trustee winding down the Madoff firm accused four Madoff family members, including Peter, with milking the business to buy everything from luxury vacation homes to paying for restaurant meals. It said Bernard Madoff's sons Andrew and Mark, brother Peter and niece Shana could have stopped the fraud. [ID:nN02332565]

The trustee sued the brother, sons and a niece of the imprisoned fraudster for what he said was $198.7 million of misappropriated customer money.

None of the Madoff family members who worked at the firm has been criminally charged.

Aside from Bernard Madoff, prosecutors obtained guilty pleas from his former longtime deputy Frank DiPascali and former outside accountant David Friehling. The only other people criminally charged so far are computer programmers Jerome O'Hara and George Perez, who were charged with fabricating customer statements.

The case is The Lautenberg Foundation et al v Peter Madoff, U.S. District Court in Newark, New Jersey No. 09-00816. (Reporting by Grant McCool. Editing by Tim Dobbyn)