Madoff Property Is Subject to Forfeiture, U.S. Says

More than $100 million in real estate, cash, bonds, art, autos, boats and other property owned by Bernard Madoff and his wife, Ruth Madoff, is subject to forfeiture, prosecutors said.

The government said in a court filing yesterday that it intends to seize assets including the Madoffs’ $7 million Upper East Side apartment in Manhattan and homes in Montauk, New York, Palm Beach, Florida, and France. Prosecutors will also seek $17 million in cash and $45 million in bonds in accounts in Ruth Madoff’s name, Acting Manhattan U.S. Attorney Lev Dassin said.

Madoff, 70, pleaded guilty March 12 to defrauding investors of as much as $65 billion in the biggest Ponzi scheme in history. His attorneys filed a request with the U.S. Court of Appeals in New York that he be freed from prison until he is sentenced on June 16. Madoff faces 150 years behind bars for using money from new investors to pay off old ones in a global fraud that ran from at least the early 1990s.

The government’s "notice of intent to seek forfeiture" is not an actual seizure request. Rather, it alerts U.S. District Judge Denny Chin and the Madoffs that prosecutors will be filing documents seeking seizure. The notice doesn’t say when the request will be made. Madoff’s appellate argument is scheduled for March 19.

Ruth Not Accused

Ruth Madoff hasn’t been accused of any wrongdoing. Her lawyer, Peter Chavkin, and Madoff’s lawyer, Dan Horwitz, both declined to comment.

"I operated a Ponzi scheme through the investment advisory side of my business," Madoff told Chin at his guilty plea last week, adding that his market-making and proprietary trading businesses were legitimate.

Lawyers for the Madoffs have said she alone is the owner of the cash, bonds, and Manhattan apartment, which they say are "unrelated" to her husband’s fraud, a judge said earlier this month.

The Madoffs claimed on Dec. 31 that they had a net worth of $826 million, according to a court filing on March 13. Of that, $700 million was the net value of Madoff’s ownership in Bernard L. Madoff Investment Securities LLC. The firm has since been valued by outsiders as worth no more than $10 million. Ruth Madoff was an employee of Madoff Securities.

Cohmad Securities

About $45 million in municipal bonds held at Cohmad Securities in Ruth Madoff’s name, and $17 million in a Wachovia Bank account in her name, are subject to seizure, prosecutors said. So is Bernard Madoff’s interest in Cohmad, they said. Cohmad is part-owned by Bernard Madoff and has been alleged by the Massachusetts Securities Division to be a "feeder fund" to his investment firm.

Prosecutors say they’ll also try to seize the Madoffs’ ownership interest in their Manhattan apartment; their land, buildings and personal property in Montauk, West Palm Beach, and Cap d’Antibes, France; a sport yacht called "Bull;" two fishing boats and a third vessel in Ruth Madoff’s name; and four cars, including two Mercedes-Benz automobiles.

In the Dec. 31 court filing, the Madoffs said their Montauk home was worth $3 million, their Palm Beach home $11 million, and their Cap d’Antibes home $1 million. Furniture, household goods and art in their four dwellings were worth $9 million. They valued jewelry at $2.6 million and their boats at more than $10 million.

In the filing the Madoffs said their monthly expenses totaled $346,758, largely for maintaining and insuring their homes and boats.

Dassin said the government will also seek a $39,000 Steinway piano and $65,000 worth of silverware, owned by Ruth Madoff and located in the Manhattan apartment.

The case is U.S. v. Madoff, 09-cr-00213, U.S. District Court for the Southern District of New York (Manhattan).

(Published by Bloomberg - March 16, 2009)