* Lawyer: DOJ not probing David Becker on Madoff conflict
* Becker was target of internal watchdog probe
* Becker had inherited money from a Madoff fund
* SEC watchdog had referred matter to DOJ for review
By Sarah N. Lynch
Nov 8 (Reuters) - The U.S. Department of Justice will not investigate whether former top Securities and Exchange Commission lawyer David Becker had a conflict of interest when he participated in agency matters involving convicted swindler Bernard Madoff, Becker's attorney said.
William Baker, representing Becker, told Reuters by telephone that he received word last Thursday that the department would not be opening a probe.
SEC Inspector General David Kotz accused Becker, the former general counsel at the SEC, in a September report of having a conflict of interest for getting involved in Madoff matters even after he and his brothers inherited $2 million in Madoff funds from their deceased mother's estate.
Kotz's report focused on Becker's role in crafting a method that would benefit longer-term Madoff investors by adjusting the payments to account for inflation. The SEC ultimately voted in support of his recommendation, but the "constant dollar method" was never put into practice.
Earlier this year, as Becker was preparing to leave the SEC and return to private practice, Madoff Trustee Irving Picard sued him and his brothers to claw back $1.5 million in alleged phony profits.
Kotz's September report said he had referred the matter to the Justice Department at the request of the Office of Government Ethics.
Becker, now a partner at Cleary Gottlieb, has vigorously defended himself against any allegations of wrongdoing, saying he properly sought guidance from the SEC's ethics counsel on two different occasions before participating in Madoff issues. Both times he was cleared to participate.
With the Justice Department's decision, Baker said this now puts an end to any more probes into the matter.
"We were gratified by the decision," Baker said.
Kotz was not immediately available for comment.