U.S. prosecutors to appeal judge's ruling on Madoff

By Grant McCool

NEW YORK (Reuters) - Federal prosecutors said on Monday they will appeal a judge's decision that allows accused swindler Bernard Madoff to stay in his Manhattan apartment under house arrest.

"The government intends to appeal the (magistrate) court's order to the district court," Acting U.S. Attorney Lev Dassin said in a letter to U.S. Magistrate Judge Ronald Ellis.

Ellis responded to the letter by ordering a stay for 48 hours until 1:00 p.m. (1800 GMT) on Wednesday.

Earlier in the day, Ellis issued a ruling, rejecting a government request to throw Madoff in jail.

The ruling gives Madoff, who has become one of the most vilified figures in America, more time in his $7 million (4.7 million pound) home before he goes to trial or pleads guilty as authorities probe a $50 billion investment fraud to which they say he confessed a month ago.

Madoff's lawyers have said their client is cooperating with government investigations following his December 11 arrest for what would be the biggest Ponzi scheme in history. In a Ponzi scheme, early investors are paid with the money of new clients.

The government has until mid-February to convince a grand jury to bring an indictment against Madoff, a former chairman of the NASDAQ stock market and a once-respected figure for more than 40 years in a financial industry that is already reeling in crisis.

It is not unusual for people accused of white-collar crimes to be offered bail packages, and at this stage of the case, indictments could come at any time, legal experts said.