Trustee Irving H. Picard spelled out his claims in a lawsuit against Ruth Madoff in United States (US) Bankruptcy Court in Manhattan. Ruth Madoff several weeks ago moved out of a US$7 million Manhattan penthouse where she and her husband had lived during their 49-year marriage.

Ruth Madoff's lawyer, Peter Chavkin, said in a statement that Picard's action was "wrong as a matter of law and fairness."

Investigation

He said the lawsuit was "particularly perplexing and totally unjustified" because his client has already forfeited to the federal prosecutor's office nearly all of the assets described in the lawsuit.

"At the same time, after a thorough and comprehensive investigation, the US Attorney's office determined that Ruth Madoff was entitled to keep property of US$2.5 million because that property could not be linked to the fraud," Chavkin said.

Picard said Ruth Madoff for decades lived "a life or splendour" using money that belonged to customers of her husband's investment firm.

He said she had no good-faith basis to believe she was entitled to the money, whether she knew of the fraud or not.

The 71-year-old Bernard Madoff is serving a 150-year sentence after admitting he squandered tens of billions of dollars in investors' money. His wife has not been charged with any crime.

- AP