NEW YORK (Reuters) - Accused Wall Street swindler Bernard Madoff has agreed to a permanent freeze on his assets without admitting or denying fraud charges in a civil case against him, a U.S. regulator said on Monday.
The U.S. Securities and Exchange Commission said in a court filing that the amount of fines and disgorgement will be decided later against Madoff, the former Nasdaq stock market chairman whose assets were temporarily frozen by court order two months ago.
The development is an indication that Madoff may settle the civil case, according to lawyers who are not involved in the matter. Madoff has not appeared in court to formally answer civil or criminal charges.
His lawyers have said Madoff is cooperating with investigators, and a hearing is tentatively scheduled for Wednesday in the criminal case. But it could be postponed by agreement between prosecutors and Madoff’s lawyers.
It may take several months at least for the initial claims of investors to be fulfilled, according to lawyers overseeing the liquidation of Madoff’s firm.
Madoff, 70, is facing criminal and civil charges in U.S. District Court in Manhattan after authorities said in December last year that he admitted to running a Ponzi scheme over many years with losses of $50 billion.
He is under house arrest and 24-hour surveillance in his luxury Manhattan penthouse apartment following his arrest for what authorities have called the biggest Ponzi scheme in history. In a Ponzi scheme, early investors are paid with the principal received from newer clients.
Madoff’s lawyer Ira Sorkin said the SEC filing “means he has been enjoined from engaging in any violations of anti-fraud regulations.”
The SEC has been severely criticized by members of Congress and commentators for failing to catch Madoff despite receiving tips. The agency’s top enforcement official, Linda Thomsen, is resigning less than a week after a congressional panel chastised here for failing to follow up on those tips.
The SEC said in Monday’s court filing that “defendant Madoff will be precluded from arguing that he did not violate the federal securities laws as alleged in the complaint”.
One white-collar defense attorney not involved in the case said Monday’s filing indicates Madoff will settle the civil case.
“It means that he is not fighting. He is going to be doing what he can to resolve everything,” the attorney, Bradley Simon, said.
Another securities lawyer, Brian Miller of the Akerman Senterfitt law firm in Miami, said “It’s a sign that he may be running out of resources to fight on every single front ... One would expect he would be concentrating his efforts to fighting the criminal case rather than the civil case.”
In court documents filed last week, an updated list of customers of Bernard L. Madoff Investment Securities LLC was peppered with more than 10,000 names of celebrities, financial firms and banks and smaller investors.
The nonprofit Securities Investor Protection Corp (SIPC) has set a July 2 deadline for customers to make their claims to a court-appointed trustee.
Court-appointed trustee, lawyer Irving Picard, said in court last Wednesday that $946 million has been recovered so far from Madoff’s firm to be disbursed to defrauded customers.
Editing by Tim Dobbyn and Jeffrey Benkoe