Got $4.5Mn for Perhaps the deal of a lifetime?

[ by Melanie Gretchen and Howard Haykin ]

The Madoffs - brothers Bernie and Peter - lost their freedom.  Now they are losing the homesteads in which their families grew up.  Peter Madoff's home in Old Westbury, NY, (see insert).  U.S. Marshalls put the property on the market for $4.495 million.  Other homes - particularly those in Palm Beach went "for a song" and at least one new owner is flipping that residence for a cool profit in excess of $3 million. 

Of course, all the homes were bought with tainted money, illegally stolen from rightful owners. 

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Continue reading Dealbook's account of the Madoff liquidations below or in Dealbook - see link below.  C-I also provides links to CNN Money and Palm Beach Daily News for accounts of other property sales.
 

May 27, 2013
For Sale: A Madoff Home With a Pool, and Shadows
By ELIZABETH A. HARRIS

The lush white mansion for sale at 34 Pheasant Run in Old Westbury on Long Island makes a grand first impression. It has a long, winding driveway; a tennis court; a two-bedroom pool house surrounded by lavish gardens; a parade of antiques in its hallways; and marble in hues of lapis and gold throughout the ground floor.

In many ways, the house is quite beautiful. But it is also a place full of shadows, a haunting just visible in its empty silver picture frames and in the red, white and blue signs that hang on every door: “United States Marshal,” the signs say. “No Trespassing.”

The shadow behind all that opulence is other people’s money. This was one of the residences of Peter B. Madoff, chief compliance officer at the firm owned by his older brother, Bernard L. Madoff.

Peter Madoff pleaded guilty last year to a host of crimes, including falsifying documents and lying to regulators. He was sentenced to 10 years in prison and ordered to forfeit all of his and his family’s assets to the government, so they could be sold, piece by piece, and the proceeds distributed to victims of his brother’s Ponzi scheme.

The Marshals Service took possession of the Old Westbury home in January, and late last month it put the property on the market for $4.495 million.

“When dealing with a home this grandiose, the outside world can lose sight of where all these fine things come from,” Kevin Kamrowski, a deputy United States marshal, said in an e-mail. “Everything in this home was obtained on the backs of other people.”

When the Marshals Service takes over a property, a well-practiced process is set in motion. First, the house is secured and the locks are changed; motion-sensing security systems and surveillance cameras might be installed. (In the foyer of the Madoff property, there is a sturdy-looking gray box standing on an ornate little table. Feel free to wave at it.)

Next, contractors are hired to do a bit of maintenance, and a real estate management company brings in a local agent to sell the property. In a high-profile case, the Marshals Service helps to select the sales team.

An important preliminary: Every single piece of property that is not a part of the house itself is indexed, appraised and tagged.

At the house on Pheasant Run, in the 600-square-foot formal living room, a forest of little white tags swing from every surface. They are on gold-color lamps, crystal candlesticks and a delicate wooden coffee table piled high with books, including “Dog Painting: The European Breeds,” “Dog Painting: A Social History of the Dog in Art” and “A Breed Apart.”

Above the fireplace, centered over a mantel of dark wood and darker marble, the dog theme continues, with a painting of what appears to be a chocolate Labrador retriever. Nearby, a painting of a blond toddler playing with another dog — also large, but this time shaggy — hangs in a gilded frame. In the library, two smaller dogs reside together in a frame above a sofa.

And if you were to take them off the wall, you would find a little white tag behind every one. Even the patio furniture, the dog dishes in the kitchen, and bottles of gin and Cognac in a mirrored bar in the corner of the library are tagged and numbered. Once the house is sold, its contents will be auctioned to the public, in what will surely be one of Long Island’s best-attended tag sales.

Despite these little touches, the house generally does not feel like a criminal’s lair. Indeed, like any other high-priced home for sale, it has been carefully staged to show its prettiest face to potential buyers. A bit of landscaping was done here, some robes were hung in an immense bathroom over there, and there was even an elaborate picnic spread arranged in a basket on the kitchen table, complete with checkered napkins and cutlery.

“This was staged with, believe it or not, my recommendations and the hard work of the U.S. Marshals office,” said Shawn Elliott of Shawn Elliott Luxury Homes and Estates, the broker brought in to sell the property. “Every single book in here was actually taken off the shelf, tagged and numbered, and then put back.”

One book, however, was left out, prominently displayed on a table in the library: “A Code of Jewish Ethics, Volume 1: You Shall Be Holy,” by Rabbi Joseph Telushkin.

As a part of the staging, the asset forfeiture division of the Marshals Service tries to remove personal effects, like clothing, that might walk away during a tour, or might remind potential buyers of who once padded down these hallways in his slippers. A small bedroom is stacked high with cardboard boxes full of clothing and other items that will eventually go to auction. Photographs removed from frames are returned to the family.

Even with a name as notorious as “Madoff,” there is no felon discount on a home like this. Bernard Madoff’s Manhattan apartment was sold for $8 million and Peter Madoff’s Park Avenue two-bedroom for $4.6 million, prices in line with the market at the time. Some personal belongings can even fetch inflated prices, like Bernard Madoff’s Mets jacket, which sold at auction in 2009 for $14,500.

Some potential buyers who have come through the Old Westbury house have been curious about the Madoffs, Mr. Elliott said. But for his part, he tries to think about the scandal as little as possible.

“The less I know about a situation, for me, the better,” Mr. Elliott said. “My job as the real estate broker on this is to get the victims as much money as humanly possible.”

Mr. Elliott has received offers on the property, but none has been accepted yet. When the house is finally sold, the proceeds will go to a victims compensation fund administered by the Justice Department, which has so far recovered more than $2.3 billion for Madoff victims. A separate fund for property and proceeds associated with Bernard L. Madoff Investment Securities is being administered by Irving Picard and has recovered $9.345 billion.

Though Peter and Marion Madoff’s primary residence was in Manhattan, they owned the house in Old Westbury for more than 20 years, and despite best efforts, that amount of history can be difficult to completely scrub away. Last week, there were still a few signs of the lives lived in that house before: a pair of reading glasses on a marble countertop; two jars of marmalade left in a bare refrigerator; and inside a long pearl box in Mrs. Madoff’s bathroom, a single artificial fingernail tip, painted a warm shade of cotton candy pink.

[Dealbook, 5/27/13], [CNN Money, 10/15/10], [Palm Beach Daily News, 5/26/13]