NY court urged to jail Madoff
Prosecutor says former financier accused of $50bn fraud has broken terms of bail.
Last Modified: 06 Jan 2009 05:17 GMT

Madoff has been under house arrest in his $7m apartment since being arrested last month [Reuters]

A US prosecutor has asked a judge to jail Bernard Madoff, the former finacier accused of Wall Street's biggest-ever fraud, saying he violated terms of his bail by trying to dispose of $1m worth of jewellery.

The request came as a congressional hearing into Madoff's alleged $50bn fraud drew calls from Democratic legislators for an overhaul of the US financial regulation system.

Madoff, a former chairman of the Nasdaq stock exchange, was charged with securities fraud in December over an investment scam that the government says cost investors, banks and charities worldwide billions of dollars.

According to court documents, Madoff confessed to investigators that he ran the scheme – in which early investors are paid off with the money of newer clients - over many years with losses of $50bn.

The 70-year-old has been under house arrest in his $7m Manhattan apartment as part of his $10m bail, which has also required his assets to be frozen.

But Marc Litt, a prosecutor, told a Manhattan federal court on Monday that the items mailed nearly two weeks ago represented a "dissipation of assets" that threatened to compromise the value of any restitution and forfeiture that Madoff would have to make.

He said one item mailed by Madoff and his wife, Ruth, was valued at more than $1m.

Ira Sorkin, Madoff's lawyer, told the judge that the items were some heirlooms, including watches and pens, and some things of nominal value including cufflinks worth $25 and a pair of mittens valued at $200.

"We attempted to get the items back before we ever learnt the government had this concern," Sorkin told Ronald Ellis, the judge.

The judge reserved judgement and asked both sides for more information concerning the purported $50bn fraud by Thursday.

Regulation overhaul

In Washington, the Madoff scandal has emerged as a rallying point for Democrats intent on overhauling financial regulation this year, with the help of the incoming Obama administration as it moves to stabilise the troubled US financial system.

"Many of us have lost confidence in the SEC," Carolyn Maloney, a Democratic congresswoman, told David Kotz, the Securities and Exchange Commission inspector-general, as he testified before the House Financial Services Committee at a hearing on the Madoff case.

Kotz has set a January 16 deadline for SEC staff to turn over Madoff records and said "social and professional relationships" may have influenced investigators.

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