Bernard Madoff and his wife, Ruth, say they are entitled to keep their $7 million penthouse on Manhattan's Upper East Side along with $62 million in assets that are held in Ruth's name. The Madoffs claim the apartment, where Bernard has been placed under a luxurious house arrest, and the money are not connected to his alleged $50 billion fraud.
According to a court order signed Monday in New York, Madoff and his attorney Ira Lee Sorkin claim that along with the penthouse, $45 million in municipal bonds held in Ruth's name, along with $17 million held in a Wachovia bank account in her name, should be exempt from seizure by the government.
The $45 million in bonds is held in a feeder fund, Cohmad Securities Corp., that shared offices with Bernard L. Madoff Investment Securities and is itself under investigation by the Secretary of the Commonwealth of Massachussetts who is seeking to determine if Cohmad played any role in the alleged Madoff scheme. It was this probe that disclosed that fact that Ruth Madoff had pulled $15 million from Cohmad in the weeks before her husband's arrest.
The freeze of the Madoffs' assets was partially lifted Monday in order to aid the court-appointed trustee in charge of closing the firm and recovering assets for Madoff's investors, according to court papers. The partial lifting of the freeze will also allow Madoff access to funds required for legal fees in connection with the civil case brought on behalf of investors.
Broadly speaking, the order by Judge Louis Stanton, in addition to allowing Madoff and his attorney access to funds, allows the Department of Justice and Securities Investor Protection Corp. to obtain Madoff's assets through various means without violating the freeze order in the Security and Exchange Commission's case.
Madoff and his attorney, however, while not objecting to the order, maintained that some assets are not properly connected to the alleged fraud and do not benefit Madoff directly or indirectly.
"Whereas while Madoff and his counsel do not object to the entry of the Relief Order... they maintain that some of the assets covered by the Relief Order are unrelated to the alleged Madoff fraud and only Ruth Madoff has a beneficial ownership interest in these assets," said the order.
Madoff may come face to face with some of his victims on Wednesday when he is scheduled to attend a court conference related to the civil suit against him. Over 2,350 claims from angry investors have been filed and that number could soon double. So far the claims add up to around $1 billion. The deadline to submit a claim is July 2, 2009.