The FBI said on Friday it had arrested Peter Madoff, the younger brother of swindler Bernard Madoff, who is serving a 150-year prison sentence for his multibillion-dollar Ponzi scheme.
The arrest of Peter Madoff had been expected as he is due in federal court in Manhattan later Friday to plead guilty to charges related to his brother's decades-long fraud.
Peter Madoff was arrested at his lawyer's office, Federal Bureau of Investigation spokesman Peter Donald said.
Federal prosecutors on Wednesday revealed in a letter that Peter Madoff had been criminally charged with participating in his brother's fraud. He is the first Madoff family member to be arrested and charged.
The letter, filed in federal court in Manhattan, said Peter Madoff was expected to plead guilty to charges of conspiracy to commit securities fraud and falsifying records as well as other charges. He agreed not to seek a sentence other than 10 years in prison, the letter said.
Peter Madoff also agreed to forfeit about $143.1 billion, including all real and personal property, the letter said. The amount is symbolic, being more than twice the estimated size of the fraud.
John Wing, a lawyer for Peter Madoff, did not immediately respond to a request for comment.
Peter Madoff was chief compliance officer at Bernard L. Madoff Investment Securities LLC when his brother was arrested on December 11, 2008.
Prosecutors have not said whether criminal cases are also being prepared against Bernard Madoff's son, Andrew, who was co-director of trading, or his niece, Shana, who was a compliance officer at the firm.
In May, Irving Picard, the trustee seeking money for victims of the Ponzi scheme, named members of Madoff's family in an expanded $255.3 million lawsuit, claiming they should have detected Bernard Madoff's Ponzi scheme at the firm that operated "as if it were their family piggy bank.
In addition to Madoff's brother Peter, Picard sued Andrew Madoff, who was co-director of trading; the estate of son Mark, co-director of trading who committed suicide in December 2010; and Shana Madoff.
In the lawsuit, Picard described Peter Madoff as a savvy investor who once served as vice-chairman of the board of governors of the Financial Industry Regulatory Authority.
Picard is seeking $90.4 million from Peter, $81.3 million from Mark Madoff's estate, $73.8 million from Andrew and $15.3 million from Shana.
Lawyers for Andrew and Shana Madoff did not immediately return calls seeking comment.
Between 1993 and 2008, Peter Madoff was paid over $36 million in salary and bonuses, Picard said, and the firm funded his lavish lifestyle, including $140,000 for a Ferrari in 1995 and a home on Manhattan's upscale Park Avenue.
Bernard Madoff, 74, is serving a 150-year prison sentence after pleading guilty to the Ponzi scheme in March 2009. He was ordered to forfeit $170.8 billion.
Peter Madoff is charged with one count of conspiracy to commit securities fraud and mail fraud as well as making false statements about the firm's compliance program and investment advisory business.
He is also charged with falsifying records.
About a dozen people have now been implicated in criminal wrongdoing related to the Madoff firm.
Five have pleaded not guilty: Annette Bongiorno, Daniel Bonventre, Joann Crupi, Jerome O'Hara and George Perez.
Frank DiPascali, the former chief financial officer often called Bernard Madoff's right-hand man, pleaded guilty in August 2009 and has been praised by prosecutors for his cooperation. He has yet to be sentenced.
Picard has estimated customers of the Madoff firm lost about $20 billion. On Monday, the U.S. Supreme Court let stand a lower court ruling on the trustee's methods for calculating losses. That decision could help Picard repay customers faster.
The case is U.S. v. O'Hara et al, U.S. District Court, Southern District of New York, No. 10-cr-00228.
(Reporting by Basil Katz; editing by Jeffrey Benkoe)