Madoff firm "piggy bank" for family, inner circle

By Grant McCool

NEW YORK (Reuters) - Swindler Bernard Madoff's firm was a "piggy bank" that enriched his extended family, supported their lavish lifestyle and paid for the house or personal expenses of at least two loyal longtime employees, according to court documents.

The papers, filed on Tuesday night by the court-appointed trustee winding down the firm to recover assets for defrauded customers worldwide, provide more details about the $65 billion fraud to which Madoff pleaded guilty on March 12.

For decades "Bernard L. Madoff Investment Securities (BLMIS) was Bernie Madoff and Bernie Madoff was BLMIS, each the alter ego of the other" lawyers for trustee Irving Picard said in the filing in U.S. Bankruptcy Court in New York.

"This entanglement permitted Madoff, at his whim and desire, to engage in innumerable financial transactions wherein he essentially used BLMIS as his personal 'piggy bank' having BLMIS pay for his lavish lifestyle and that of his family.

"Madoff used BLMIS to siphon funds which were, in reality, other people's money, for his personal use and the benefit of his inner circle. Plain and simple, he stole it."

Picard's lawyers have said they have recovered only about $1 billion so far, but they have asked investors to voluntarily return about $735 million in profits and sought billions from so-called "feeder funds" that dealt with Madoff.

Madoff's firm funneled millions to the extended family, paid their country club memberships, salaries of boat captains, housekeepers and others who did not work for the company, according to the documents. Several family members had corporate

credit cards paid for even though they were not employed with the firm.