NEW YORK – A judge on Monday allowed Bernard Madoff to remain confined to his Manhattan penthouse, rejecting a bid to jail the disgraced financier but imposing new restrictions to keep him from mailing any more valuables to family and friends.
In a ruling that provided limited satisfaction to investors wiped out in what may be the largest Ponzi scheme ever, Magistrate Judge Ronald L. Ellis ordered Madoff to take an inventory of the items in his $7 million apartment and submit his outgoing mail to security checks.
Prosecutors said they would ask another judge to jail Madoff while he awaits trial.
"There is a thirst for blood that transcends just those who have been victimized," said attorney Stephen A. Weiss, who added that some of his several dozen Madoff investors "just want to have this guy's head."
Sweeping aside the emotions of the case, the judge cited laws requiring that defendants be allowed to stay out on bail before trial unless they are a danger to the community or a threat to flee.
Those standards make it difficult for prosecutors to have white-collar defendants jailed before trial. The judge noted suspects in nearly 75 percent of federal fraud cases are granted bail.
Prosecutors said they planned to appeal the ruling and ask another judge to revoke Madoff's bail. The judge stayed his ruling for 48 hours, meaning the new restrictions will not take effect right away.
The judge also said restrictions in a separate civil case that apply to property under Madoff's control would apply to the criminal case — meaning moving money around by computer would violate his bail conditions.
But in keeping Madoff out of jail for now, Ellis said it did not matter that Madoff was charged in what appears to be the largest Ponzi scheme in history, that Madoff is publicly vilified or that a conviction might bring a long prison term.
The judge said prosecutors' claim that Madoff presented an economic harm to the community was shaky. The financier sent more than $1 million in jewelry to family and friends over the holidays.
"Aside from the bare assertion that there remains some risk of flight, the government has failed to articulate any flaw in the current conditions of release," the judge said.
Madoff is already required to wear an electronic monitoring bracelet, submit to 24-hour private security guards and post his homes in Manhattan, Long Island and Florida as part of his $10 million bail package.
Madoff's lawyer Ira Sorkin said the opinion speaks for itself. Sorkin has said the mailing of the jewelry over the holidays — including at least 16 watches, a jade necklace, an emerald ring and four diamond brooches — was an innocent mistake.
In imposing the new restrictions, the judge said Madoff's ability to move property should be restricted "as completely as possible."
"It is highly suspect that a man as sophisticated as Madoff appears to be did not pause to consider the possible ramifications of this proposed course of action on his release conditions," the judge wrote.
The decision means Madoff will avoid having to leave the comfort of his $7 million penthouse for a cramped jail cell with nothing but bunk beds, a sink and toilet.
Madoff's swank confinement has drawn throngs of reporters and gawkers to his elegant Upper East Side apartment building, a 1926 brick-and-limestone structure with just two spacious apartments per floor. His neighbors include "Today" show co-host Matt Lauer and prominent players in finance, law and advertising.
The commotion led Madoff to send his neighbors a note last month expressing "profound apologies for the terrible inconvenience that I have caused over the past weeks."
"If putting him in jail would put pressure to help the government find money, then people want him in jail. If he stays out, the pressure to cooperate is less," Sussman said.
The deadline for prosecutors to deliver a formal indictment of Madoff has been extended until Feb. 11.
Separately, a federal bankruptcy judge ruled that a trustee can issue subpoenas to investigate the flow of money in the investment fund run by Madoff. The trustee is overseeing the liquidation of Madoff's fund for the bankruptcy court.