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NEW YORK (Reuters) - A U.S. judge blocked the transfer of the personal wealth of swindler Bernard Madoff and his wife because it <span style="font-weight: bold">could be </span>
subject to forfeiture as various parties compete to lock down the assets for distribution to defrauded investors.The order on Monday by Judge Denny Chin, who oversees the criminal case against Madoff, came on the same day a bankruptcy court judge approved the appointment of an interim trustee to coordinate efforts to recover the former investment adviser's property and money.
Madoff pleaded guilty in March to running the biggest investment fraud in Wall Street history.
U.S. prosecutors said in court papers on Friday that Chin should restrain the Madoff assets so they are not part of any proceeding in bankruptcy court.
At a hearing in U.S. Bankruptcy Court in New York on Monday, Judge Burton Lifland said that <span style="font-weight: bold">activities by various authorities to recover Madoff assets had been "disjointed and uncoordinated."</span>
U.S. prosecutors, the U.S. Securities and Exchange Commission, the court-appointed trustee liquidating Madoff's brokerage firm and groups of investors are among those seeking to find and recover the billions in assets, which include homes, boats, cars and business interests.
Madoff, a former nonexecutive chairman of the Nasdaq stock market, pleaded guilty on March 12 to running a global fraud involving as much as $65 billion over 20 years, drawing in thousands of investors all over the world. The 70-year-old is in jail until sentencing on June 16, when he could be sent to prison for the rest of his life.
"Clearly there has to be a trustee in bankruptcy at least on an interim basis to sit at the table to try and coordinate all of the activities surrounding the Madoff interests," Lifland said in bankruptcy court.
The case was brought by a group of investors who wanted to force Madoff into personal bankruptcy as a way of making sure all of the assets were accounted for.
It is not yet known who would serve in the new role. The interim trustee would work alongside Irving Picard, the trustee winding down the Madoff brokerage firm and recovering those assets to pay back former customers.
U.S. authorities have already seized a house in Florida belonging to Madoff and his wife, Ruth, as well as three vessels and a boat trailer in Ruth Madoff's name. The government said in court papers that the proceeds would be distributed pro rata to the former customers in the fraud.
The government papers also indicated it was filing additional information under seal in an FBI agent's affidavit, saying that the material "contains nonpublic investigative details" about the case.
Bernard Madoff and his outside accountant are the only two people charged in the case so far.