UPDATE 1-Madoff trustee seeks $150 mln investor "clawback"

(Adds details on lawsuit)

NEW YORK, April 9 (Reuters) - The trustee liquidating Bernard Madoff’s brokerage is seeking the return of $150 million that an offshore investor withdrew less than two months before the jailed swindler’s arrest, saying the money should be returned to other customers.

The lawsuit, filed Thursday, signals that trustee Irving Picard is ramping up efforts to use bankruptcy law to try to “claw back” funds withdrawn by some Madoff clients.

While Madoff was running his long-standing Ponzi scheme, the lawsuit says, some customers received fund distributions that were nothing more than fictitious profits. This money should be returned to help reimburse Madoff’s many victims, Picard argues in the lawsuit.

The complaint was filed in U.S. Bankruptcy Court in Manhattan against Vizcaya Partners Ltd, described as an international business with main operations in the British Virgin Islands.

It seeks the return of $150 million wired from the Madoff firm to a custodian for Vizcaya on about Oct. 31, less than two months before Madoff’s arrest. The custodian, Banque Jacob Safra Ltd of Gibraltar, was also sued.

“The purpose of this proceeding is to recover the preferential payment received by Vizcaya,” the complaint says.

Picard, a court-appointed trustee, is seeking to recover assets linked to the confessed swindler’s Bernard L. Madoff Investment Securities LLC.

It was not clear from the court papers why the trustee chose this case as one of his first attempts to claw back investor funds.

But court filings show he has sought to hire attorneys in a number of places -- including Gibraltar, the Cayman Islands and Luxembourg -- in his search for funds that can be returned to victims, suggesting he is focusing on possible recoveries in these locations.

The lawsuit says Vizcaya, according to the Madoff firm’s records, opened an account with the firm in December 2001. Since January 2002, Safra or its affiliates invested about $327 million with Madoff for Vizcaya’s benefit, the lawsuit said.

A telephone number for Vizcaya could not immediately be located. A person who answered the phone at the head office of Banque Jacob Safra in Geneva said there was no one available to speak to a reporter because it was after hours.

Legal experts say that because Madoff has admitted his fraud was a Ponzi scheme in which early investors are paid with money deposited by later ones, those who earned big profits on their Madoff portfolios could be subject to such clawback lawsuits.

Madoff has pleaded guilty to masterminding Wall Street’s biggest-ever investment swindle, involving as much as $65 billion in client funds. He could be ordered to prison for the rest of his life when sentenced in June.

Picard is working with the U.S. Securities Investor Protection Corp (SIPC) to recover as much of Madoff’s assets as possible. He has said previously he has located just more than $1 billion, a fraction of total investor losses.

SIPC, funded by brokerage firm dues, was established by Congress in 1970 to maintain a reserve for investors of failed brokerages. (Reporting by Martha Graybow; Editing by Brian Moss and Andre Grenon)