* Lawsuit grows to $226.4 million from $198.7 million
* Trustee says Madoffs treated firm as family piggy bank
By Jonathan Stempel
Nov 8 (Reuters) - The trustee seeking money for Bernard Madoff's victims has increased the size of his lawsuit against family members of the imprisoned Ponzi schemer to $226.4 million.
Irving Picard, the trustee, in an amended complaint, said the Madoffs were "completely derelict" in overseeing operations at Bernard L. Madoff Investment Securities LLC, which collapsed when Madoff was arrested on Dec. 11, 2008.
He also said the Madoffs treated the firm like a "family piggy bank," withdrawing huge sums to fund other businesses as well as personal expenses such as vacation homes and boats.
The defendants are Bernard Madoff's brother Peter, who was the firm's chief compliance officer; son Andrew, who was co-director of trading; the estate of son Mark, who was also co-director of trading; and niece Shana, a compliance officer. Mark Madoff committed suicide in December 2010.
Lawyers for the defendants did not immediately respond to requests on Tuesday for comment.
Picard first sued the Madoffs in October 2009 for $198.7 million. Most of the additional sum reflects salaries and bonuses that the trustee said were paid between 1993 and 2000.
Bernard Madoff has said he began his Ponzi scheme in the early 1990s, but prosecutors believe it began much earlier.
None of his family members has been charged with criminal wrongdoing.
Picard is now seeking $77 million from Peter Madoff, $71.9 million from Mark Madoff's estate, $64.7 million from Andrew Madoff and $12.7 million from Shana Madoff.
In September, U.S. Bankruptcy Judge Burton Lifland in Manhattan allowed Picard to pursue most of his claims against the Madoffs, and to file the amended complaint.
Lifland called the Madoff family members' failure to stop the fraud "unsurprising given their close familial relationship with Madoff" and ties to the firm.
But he said they "steadfastly contend their involvement with BLMIS was entirely legitimate, and they, above all others, were betrayed by their family's patriarch."
Bernard Madoff's wife Ruth was sued by Picard for $44.8 million in July 2009, the month after she forfeited most of her assets in a settlement with federal prosecutors. She has denied knowing about her husband's crime while it was taking place.
Picard has filed roughly 1,050 lawsuits on behalf of former Madoff customers who he has said have $17.3 billion of valid claims. Bernard Madoff, 73, is serving a 150-year prison term.
The case is Picard v. Madoff et al, U.S. Bankruptcy Court, Southern District of New York, No. 09-ap-01503.