March 2 (Bloomberg) -- Ruth Madoff, the wife of accused fraudster Bernard Madoff, said she owns a Manhattan apartment, $45 million in bonds, and $17 million in cash that are “unrelated” to her husband’s alleged Ponzi scheme.
U.S. District Judge Louis Stanton, who is presiding over a lawsuit against Madoff by the Securities and Exchange Commission, filed an order today modifying terms of an asset freeze on Bernard Madoff’s property. As part of his order, he cited a claim by Ruth Madoff that some of her assets are separate from his.
Madoff’s lawyers claim “only Ruth Madoff has a beneficial ownership” to a Manhattan apartment, about $45 million in municipal bonds on deposit in at Cohmad Securities Corp., and approximately $17 million in cash in another account, Stanton said. Ruth Madoff says these assets are “unrelated” to the alleged fraud, Stanton wrote, citing her husband’s lawyer.
Prosecutors haven’t filed papers to seize Bernard Madoff’s property, Stanton said. Before doing so, they and Bernard Madoff wanted the court’s permission to modify an existing freeze order so that he may surrender assets he owns. The money manager has agreed to give up his securities firm, real estate, and artwork and tickets owned by his firm, according to a filing by the trustee of Bernard L. Madoff Investment Securities LLC.
Ira Sorkin, the lawyer for Madoff and his wife, declined to comment. Janice Oh, a spokeswoman for Acting U.S. Attorney Lev Dassin, also declined to comment. David Sheehan, a lawyer for receiver Irving Picard, didn’t immediately return a call.
Madoff was arrested on Dec. 11 at his multimillion dollar apartment on Manhattan’s Upper East Side after allegedly confessing that he and his firm used new money to pay old investors in a Ponzi scheme. The investment adviser hasn’t formally responded to the one federal securities-fraud charge pending against him. He faces as long as 20 years in prison if convicted. Madoff, who is free on $10 million bail, has been ordered to remain in his apartment under house arrest.
Stanton didn’t address Ruth Madoff’s claim that she owned $45 million in municipal bonds and $17 million in an account at Wachovia Bank NA. The judge granted a request by prosecutors that the existing freeze order remain in place for the Manhattan apartment and Madoff homes in Montauk, New York, and Palm Beach, Florida.
Cohmad Securities, where Ruth Madoff says her account holds municipal bonds, had an office in Madoff’s headquarters in midtown Manhattan. The firm was part-owned by Bernard Madoff and has been alleged by the Massachusetts Securities Division to be a “feeder fund” to his investment firm.
Last month, Massachusetts regulators said Ruth Madoff withdrew $15.5 million from Cohmad Securities in November and December, including $10 million on the eve of her husband’s arrest for securities fraud.
Ruth Madoff hasn’t been accused of wrongdoing.
Among the assets Madoff has agreed to surrender is his interest in Primex Holdings LLC, according to a court filing by Picard. The Primex system is a joint venture between Madoff Securities and several large brokerages. It was designed to replicate the auction process on the New York Stock Exchange.
Separately, Picard is seeking to liquidate Madoff’s brokerage, find assets and distribute them to Madoff’s customers. Picard and attorneys from the law firm Baker Hostetler LLP, which Picard hired, have found about $950 million in cash and securities.
The case is SEC v. Madoff, 08-10791, U.S. District Court for the Southern District of New York (Manhattan).
To contact the reporters on this story: David Glovin in New York federal court at firstname.lastname@example.org.
Last Updated: March 2, 2009 19:40 EST
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