New York investor sues trustee of Madoff's firm

NEW YORK (Reuters) - A private New York company has sued the trustee who is liquidating accused fraudster Bernard Madoff's firm for the return of $10 million (6.9 million pounds) it invested six days before Madoff was arrested.

According to the complaint dated January 1 by Rosenman Family, its managing member, Martin Rosenman, talked to Madoff on the phone on December 3 about investing in his investment advisory fund.

Madoff told Rosenman the fund was closed until January 1, 2009, but he could wire money to an account where it would be held, the complaint in U.S. Bankruptcy Court in Manhattan said.

It said that the family transferred $10 million to a JPMorgan Chase account on December 5.

Madoff was arrested and charged with securities fraud on December 11 and is currently under house arrest.

Authorities have said in court documents that Madoff confessed to running a Ponzi scheme for years that had losses of $50 billion in what would be Wall Street's largest fraud. A Ponzi scheme is one in which early investors are paid off with the money of new clients.

"Family seeks a mandatory injunction requiring Chase to turn over $10 million," the complaint in bankruptcy court said.

"Family demands judgement that the funds deposited by Family in the Chase Account on December 5, 2008 are not property of the debtor's estate and the debtor has no interest in these funds."

The investment adviser's firm, Bernard L. Madoff Investment Securities, is being liquidated under court-appointed trustee Irving Picard, a lawyer.

Rosenman, who is also president of the Stuyvesant Fuel Service Corp in New York, sued Picard and JP Morgan Chase Bank for recovery of his money.

A lawyer for Picard declined to comment. A representative of the bank was not immediately available for comment.

The complaint said that Rosenman had neither invested nor conducted business with Madoff or his firm before the December 3 phone conversation.

The cases:

Rosenman Family v Irving Picard, as Trustee for the liquidation of Bernard L. Madoff Investment Securities and JP Morgan Chase Bank - number not yet assigned; U.S. Bankruptcy Court, Southern District of New York (Manhattan).

Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities, 08-01789, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

(Reporting by Grant McCool; editing by Jeffrey Benkoe)