- The Washington Times - Monday, January 12, 2009

NEW YORK (AP) — A judge allowed disgraced money manager Bernard Madoff to remain free on bail Monday, rejecting an attempt by prosecutors to send him to jail for mailing more than $1 million in jewelry to family and friends over the holidays.

The decision is sure to outrage investors who have been clamoring for Madoff to be sent to jail for allegedly carrying out the largest financial fraud in history — a fraud that authorities say he described as a pyramid scheme.

Prosecutors said the gifts were grounds to have his bail revoked because what’s left of Madoff’s assets will have to be returned to burned investors.

But the judge not swayed by the their arguments that Madoff represents an economic danger to the community because of the size of the fraud and his actions in sending the gifts.

“The government fails to provide sufficient evidence that any potential future dissemination of Madoff’s assets would rise to the level of an economic harm,” Magistrate Judge Ronald L. Ellis wrote.

Ellis also acknowledged the widespread public interest in Madoff’s bail and the case, but said that proper legal considerations must take precedence.

In a separate decision, another magistrate signed off on an extension for the deadline to indict Madoff until Feb. 11. That means Madoff will remain free for at least another month, provided he does not violate the terms of his bail during that time.

A bankruptcy judge, meanwhile, said a trustee can issue subpoenas to investigate the flow of money in an investment fund run by Madoff.

U.S. Bankruptcy Judge Burton Lifland gave permission to the trustee, Irving Picard, to subpoena witnesses, including directors and officers of Bernard L. Madoff Investment Securities LLC. The trustee is overseeing the liquidation of the fund for the bankruptcy court.

There were no objections to the trustee’s request.

The anxiously awaited bail decision does put more restrictions on Madoff, including forcing him to come up with a list of items at his apartment and allowing a security firm to check on the items. The security company will also be allowed to search all outgoing mail from Madoff to ensure that no property has been transferred.

Defense lawyer Ira Sorkin says the “the opinion speaks for itself and we intend to comply with the judge’s order.” Sorkin has said the gifts were an innocent mistake and said he is neither a danger to the community nor a threat to flee.

Yusill Scribner, a spokeswoman for prosecutors, said the government had no comment on the ruling.

Meanwhile, the trustee overseeing the liquidation of Madoff’s investment fund received permission Monday from a bankruptcy judge to subpoena witnesses and gather documents to investigate the flow of money.

U.S. Bankruptcy Judge Burton Lifland ruled that the trustee, Irving Picard, could subpoena witnesses, including directors and officers of Bernard L. Madoff Investment Securities LLC.

The trustee has identified more than $830 million in liquid assets of the defunct brokerage firm that may be subject to recovery.

Associated Press Writer Tom Hays contributed to this report.

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