Madoff Sister-in-Law Lists Palm Beach Home

Bernie Madoff's sister-in-law, Marion, has listed her 7,300-square-foot Palm Beach, Fla., home for $6.5 million, perhaps at an inflated price, a source told AOL Real Estate.

"Homes for sale in Palm Beach can be $47.5 million, so $6.5 million isn't a big number relatively speaking," says local real estate agent Jeff Lichtenstein, who does not represent the property, and who notes that the appraisal values the home at 200 Algoma Road at $3,752,000, down from $4,477,000 last year. "However, the Madoff home is not on the ocean or intracoastal, so it actually is [priced] very high."

Adds Lichtenstein, "Asking a price practically double the appraiser's value is insulting. Wasn't one Ponzi scheme enough?"

Marion Madoff purchased the home, which sits about three houses from the water, in 2001 for $3.8 million with her husband Peter Madoff, who was the the senior managing director and chief compliance officer for the Bernie L. Madoff Invesment Securities.

However, ownership of the home was transferred to her in 2006, perhaps in an attempt to block seizure of the home, according to news reports. But according to a court case filed against Marion, BLMIS funds were allegedly

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used to purchase the home and thus it can potentially be sold to pay restitution to Madoff's non-family victims. "There were a lot of Madoff victims in the Palm Bach area, especially on Palm Beach Island," says Lichtenstein of Illustrated Properties.

Palm Beach Island was essentially a ground zero for Madoff victims. Bernie Madoff himself, who owned an 8,700-square-foot mansion north of town, prowled for clients at the exclusive Palm Beach Country Club, where he was a member, according to Newsweek. His 1973 5-bedroom, 7-bath home sold this past fall, reported Luxist, after the sale of his New York City penthouse and his Montauk, N.Y., home.

Court and property records indicate more than a dozen Madoff victims have or had addresses on Palm Beach Island, reported the Real Deal. And apparently Marion Madoff considers herself to be a victim, too.

"Peter's wife lost millions of dollars that had been invested with his brother and any suggestion that Peter was aware of his brother's fraud is absurd," Peter Madoff's lawyer, Charles Spada once told the Wall Street Journal.

The single-story five-bedroom home that was quit-claimed to Marion Madoff is "totally renovated and ready to move in," according to the listing details of Carole and Brett Koeppel of Sotheby's International Realty. The half-acre property has a pool, gardens and fountains, and listing photos show a wood-paneled office and a covered outdoor entertainment area. There's also a three-car garage.

Lichtenstein, who is not involved in the sale, says the 1970-built home is not officially on the Multiple Listing Service at this time, although he noted that Marion's tax bill is $68,576, down from last year's $78,129.

Although Marion Madoff has a homestead exemption, reports Divorce Saloon, which in Florida means a home is exempt from restitution and forfeiture in case creditors win an action against the homeowner, that didn't stop creditors for going after her, however.

Irving Picard, the trustee for the liquidation of BLMIS, filed a lawsuit against Marion that alleges "In 2001, $4,244,649 of BLMIS funds were used for Peter and Marion Madoff's purchase of their Palm Beach home. In May of 2001, Peter Madoff's sister-in-law, Ruth Madoff, 'loaned' him $4,200,000 in connection with the purchase of a home located in Palm Beach, FL. That money, however, was wired directly to Peter Madoff's real estate agents and lawyers from various BLMIS operating accounts. Specifically, the funds were transferred through three separate payments: $10,000 on March 27, 2001 to Sotheby's International Realty; $365,200 on April 18, 2001 to Sotheby's International Realty; and, $3,869,449 on April 30, 2001 to Koeppel, Gottlieb & Mesches."

Picard thus holds Marion Madoff liable for $4.24 million, as the beneficiary of what it alleges is "improper transfers." The same applies to other properties her name is tied to.

The lawsuit further alleges that BLMIS funds were used to pay off the balance of the mortgage on Peter and Marion Madoff's home in Old Westbury, NY. The Madoffs purchased that home on November 16, 1990 for $2.5 million and took out a $1.5 million mortgage on it. BLMIS paid off the mortgage on the house on May 31, 2002 in the amount of $714,401.12, allegedly using funds from one of the accounts maintained as part of the IA Business.

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