- The Washington Times - Tuesday, March 31, 2009

NEW YORK (AP) - Within days of Bernard Madoff’s arrest, federal prosecutors trying to unravel his massive Ponzi scheme also moved to freeze the assets of his brother and longtime business partner, a lawyer revealed Tuesday.

According to a Justice Department document dated Dec. 24, Peter Madoff agreed not to dispose of his substantial fortune and to curtail his personal spending until further notice.

The reins on his lifestyle weren’t exactly tight. Madoff was allowed living expenses of $10,000 per month, although he had to account for his spending and provide the government with receipts.

The existence of the agreement was first revealed publicly on Tuesday by one of Peter Madoff’s lawyers, Charles Spada, who referenced it during a hearing in a civil lawsuit brought by one of the swindle’s victims.

Spada also showed a copy of the order to the opposing lawyer in the case, Steven R. Schlesinger, who shared some details of it with The Associated Press.



Peter Madoff was an executive and chief compliance officer at his brother’s company, Bernard L. Madoff Investment Securities, but has not been charged with any criminal wrongdoing.

Federal prosecutors haven’t said whether they believe Peter was aware of his brother’s crimes. Bernard Madoff pleaded guilty on March 12 to defrauding investors of billions of dollars in perhaps the largest Ponzi scheme ever.

Investors who lost their savings in the scam have been urging prosecutors to seek out any Madoff accomplices and seize the assets of any of his relatives who benefited from the crime.

A spokeswoman for the U.S. Attorney in Manhattan declined to comment on whether Peter Madoff’s assets had been frozen. Prosecutors have previously indicated in court that they intend to push the family to disgorge any ill-gotten profits.

Spada did not return phone messages.

Peter Madoff’s assets were ordered frozen a second time last week by a state judge in suburban Nassau County in response to a civil lawsuit filed by a student whose $478,000 trust fund disappeared in the scam.

A New York appeals judge in Brooklyn on Tuesday refused to lift that temporary order, despite Spada’s plea that it was redundant.

Spada also argued that the new asset order had so handcuffed his clients’ finances that he was unable to “buy a loaf of bread.”

The issue is scheduled to go before a state judge again on Friday.

In the civil lawsuit, a Long Island student accused Peter Madoff, who had been in charge of the trust fund, of wrongly investing it in his brother’s Ponzi scheme.

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