Trustee to keep tabs on Ruth Madoff's spending

NEW YORK -- Bernard Madoff's once free-spending wife has suffered another financial indignity: She must now report any purchases over $100 to a trustee.

U.S. Bankruptcy Court Judge Burton Lifland signed off on an agreement last week that imposed the monthly reports while freezing Ruth Madoff's assets in response to the court-appointed trustee's $45 million claim against her.

The order in the Manhattan court allows Ruth Madoff only to pay "reasonable" legal and living expenses and up to $589,000 in back taxes until the matter is resolved.

Mrs. Madoff's lawyer, Peter Chavkin, declined comment on Monday. Last week, he called the claim by Trustee Irving Picard "wrong as a matter of law and fairness" because his client already has forfeited nearly all her wealth to federal prosecutors.

Picard — appointed to locate and liquidate Madoff's assets to pay back thousands of burned customers — sued the disgraced financier's wife last week, claiming she used investor money to finance "a life of splendor."

The suit alleges Mrs. Madoff pocketed $23.7 million from the business in the last two years, including $1.1 million to pay personal expenses charged to her American Express card and $2.7 million in 2007 to pay for her yacht. It seeks the return of at least $44.8 million that it says she knew or should have known belonged to the business and its clients, along with unspecified compensatory and punitive damages.

The 71-year-old Madoff is serving a 150-year sentence after admitting he squandered tens of billions of dollars in investors' money with a massive pyramid scheme.

His wife has not been charged with any crime. But she agreed to give up all of her possessions in return for a promise that federal prosecutors wouldn't pursue $2.5 million not tied to the fraud. The money, though, is not protected from civil legal actions that might be pursued by the trustee or by separate investor lawsuits.

The scandal forced Mrs. Madoff to move out of a $7 million Manhattan penthouse where she and her husband had lived during their 49-year marriage.