Bad Timing? Madoff's Wife Withdrew $10Mil a Day Before His Arrest, State Says

February 11, 2009— -- On Dec. 10 - one day before she agreed to secure her husband's $10 million bail - Ruth Madoff allegedly withdrew $10 million from a feeder fund under investigation by Massachusetts authorities for allegedly steering victims to alleged $50 billion fraudster Bernard Madoff, according to a state complaint filed today in Boston.

News of that curiously timed withdrawal came even as federal prosecutors in New York acknowledged in court papers today that they are engaged in ongoing talks with Madoff's lawyers that could lead to a plea bargain agreement.

Ruth Madoff allegedly withdrew the $10 million from Cohmad Securities Corporation, a "feeder fund" that shared Manhattan office space with Madoff's firm at 885 Third Avenue and which received 84 percent of its income in fees from Bernard L. Madoff Investment Securities LLC (Madoff Investments), income in excess of $67 million over eight years, according to the complaint against Cohmad filed by Massachusetts authorities today.

Click here to see the documents.

The alleged Dec. 10 withdrawal by Ruth Madoff raised questions about whether the alleged Ponzi scheme mastermind's wife made false representations as to the assets with which she secured the bail, multiple sources involved in various aspects of the Madoff case said.

The withdrawal came during the same 24-hour period when her husband was allegedly confessing to his two sons that his investment management business was "all one big lie," according to the federal government complaint filed Dec. 11 at the time of Madoff's arrest.

The $10 million withdrawal came on top of a $5.5 million withdrawal on Nov. 25.

The U.S. Attorney in Manhattan was unable to make any specific comment concerning Ruth Madoff's withdrawals, and whether those funds were part of a financial package she assured the government was her property and not subject to recovery by investors.

Investigators involved in attempting to unravel Madoff's 40-year trail of alleged illegal activity and the commingling of his family's money with that of investors say that news of Ruth Madoff's withdrawal and the extensive overlap of Cohmad Securities and Madoff Investments are yet another set of newly discovered and unexplored trails.

Ira Lee Sorkin, lead attorney for Bernie Madoff simply said in an e-mail, "no comment," in response to an e-mailed question concerning Ruth Madoff's withdrawal.