Bernard Madoff's Wife Gives Up Much of Her Fortune

By AMIR EFRATI

Ruth Madoff, the wife of one of the most reviled swindlers in history, has agreed to give up almost $80 million worth of assets, keeping just $2.5 million in cash in an agreement reached with federal prosecutors.

The settlement with the U.S. attorney's office in Manhattan, which brought the criminal case against her husband, Bernard Madoff, was approved late Friday by U.S. District Court Judge Denny Chin, who is scheduled to sentence Mr. Madoff on Monday.

The settlement involving Mrs. Madoff was finalized alongside a court order of forfeiture against Mr. Madoff in the amount of $170 billion, which represents the amount of money that prosecutors say flowed into his investment firm.

However, that massive amount is likely largely symbolic and simply an indication that prosecutors can tap any assets of Mr. Madoff's they can find. Much of that money went back out to investors in the form of withdrawals but also funded the Madoff family's lavish lifestyle and that of some associates. The judgment divests Mr. Madoff from millions of dollars worth of real estate and other property. The settlement doesn't prevent the Securities and Exchange Commission or the Madoff trustee from pursuing Mrs. Madoff's funds in the future.

Nonetheless, the settlement will help Mrs. Madoff, 68 years old, move on from what has been a tumultuous period since the multibillion-dollar fraud emerged on Dec. 11 of last year. She has been vilified in the tabloids, fended off photographers camped outside her Manhattan apartment building, and shunned by same communities in New York that once embraced her. She has also been under a voluntary asset freeze since December.

According to court documents released on Friday, Mrs. Madoff consented to the sale of her properties in Palm Beach, Fla., Montauk and Manhattan, as well as boats and vehicles, in order to preserve value for victims.

Either the government or the court-appointed trustee of the defunct Madoff firm charged with recovering assets for victims will soon target assets held by other family members and associates who received tainted money from Mr. Madoff, according to people familiar with the matter.

Earlier this year Mr. Madoff asked prosecutors to allow his wife to keep about $70 million in assets held in her name, which he argued weren't connected to his fraud. In addition to the $7 million penthouse on Manhattan's Upper East Side, Ruth Madoff held some $45 million in municipal bonds at Cohmad Securities Corp., a brokerage firm partially owned by Mr. Madoff, according to a court filing. She also held $17 million at Wachovia Bank, according to the filing. She withdrew $15.5 million from Cohmad shortly before Mr. Madoff was arrested.

Federal investigators are continuing to probe who may have helped Mr. Madoff perpetuate or conceal his fraud. The Madoff family members who worked at the firm remain under scrutiny by federal investigators, but none of them have been accused of wrongdoing. Mrs. Madoff at one point had a minor role at the firm, checking bank statements it received. Friday's settlement wouldn't preclude future charges.

Peter Chavkin, a lawyer for Mrs. Madoff, said she "unequivocally did not know of the misconduct and did not participate in it."

Write to Amir Efrati at amir.efrati@wsj.com