Investigators searching the office desk of Bernard Madoff after his arrest found about 100 signed checks, totaling about $173 million, ready to be sent to family, friends, and employees, prosecutors said.

Assistant U.S. Attorney Marc Litt in Manhattan made the disclosure in a letter submitted today to U.S. Magistrate Judge Ronald Ellis, as part of a renewed request for the judge to jail Madoff prior to his trial. Ellis plans to rule on the government’s request tomorrow or on Jan. 12, according to the judge’s law clerk, who declined to be named. No court hearing is currently scheduled.

Prosecutors have previously disclosed that Madoff, before his Dec. 11 arrest, had said he wanted to transfer $200 million to $300 million of his investors’ money to “selected family, friends, and employees.” Litt’s letter today indicates that Madoff was ready to send the money out.

“The only thing that prevented the defendant from executing his plan to dissipate those assets was his arrest by the FBI on Dec. 11,” Litt wrote in his letter.

Madoff, 70, was arrested on Dec. 11 at his apartment and charged with one count of securities fraud for using billions of dollars from new investors to pay off older ones. Madoff told authorities that investors may have lost $50 billion, prosecutors said.

Madoff has been restricted to his Upper East Side home on $10 million bond that the government agreed to after Madoff’s arrest. He faces as long as 20 years in prison as well as a $5 million fine if convicted. Madoff’s assets were frozen in a related civil lawsuit brought by the Securities and Exchange Commission.

Bracelet, Watches

Prosecutors on Jan. 5 asked Ellis to jail Madoff because he mailed items including a diamond bracelet and watches to family in violation of a court-ordered asset freeze. In a letter to Ellis two days later, Madoff’s defense lawyer, Ira Sorkin, said his client didn’t know the order from the SEC lawsuit applied to his personal items and that he was merely sending sentimental items to family.

Sorkin said other steps besides revoking bail could be taken to address the government’s concerns, including putting all of Madoff’s jewelry in escrow and having guards search outgoing mail. Sorkin today didn’t immediately respond to a call seeking comment on the checks.

‘Preposterous’

“The defendant’s recent distribution of jewelry and watches demonstrates a continuing intention to benefit those close to him to the detriment of his victims,” Litt wrote today, adding that Madoff’s claim to have made an innocent mistake while reaching out to family is “preposterous.”

“That’s what telephones, e-mails, and personal letters are for,” Litt said.

Madoff is also scheduled to appear in court on Jan. 12 for a hearing in which prosecutors must present some of their evidence against him. Such hearings are extremely rare and are usually postponed or superseded by an indictment or another accusatory document.

If Madoff is indicted, he will be required to appear in court at some point to enter a formal plea to the charges against him.

 

The case is U.S. v. Madoff, 08-mag-2735, U.S. District Court, Southern District of New York (Manhattan).

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