Before Bernard Madoff was sentenced to 150 years for fraud yesterday, the courts began liquidating his real estate portfolio to pay back his victims.
On Friday, three days before Madoff received his sentence, Judge Denny Chin for the Southern District of New York ruled that U.S. Marshals could begin selling seized Madoff homes around the world. He and his wife, Ruth, have properties on the Upper East Side and in the Hamptons, Palm Beach, Fla., and France.
One property that is generating considerable interest, particularly in the broker community, is a beachfront getaway in the Montauk section of the Hamptons that sits unusually close to the ocean and has had only one previous owner, making details of its layout and appearance something of a mystery.
Adding to that intrigue is the fact that many expected Ruth Madoff to fight to keep the home, as it was purchased with money that was not connected with her husband’s far-reaching Ponzi scheme, according to reports in March from sources close to her legal team. The Madoffs bought the Montauk home in the early 1990s, and Bernard’s scam, which may have bilked investors of up to $65 billion, began in the late 1980s, they said.
But in Friday’s decision, Judge Chin seemed not to buy that line of thinking about homes in which Ruth “would have claimed an interest at a forfeiture hearing,” according to a court statement.
The property, which covers 1.2 acres, was purchased in 1980 for $250,000, according to its deed. It’s worth $7 million today, according to the district court. But what’s not clear yet is whether the five-bedroom Montauk home will be sold by a broker or through an auction. A spokesperson for the court would not comment.
What is apparent, though, is that its sale likely spells the probable end of a close three-decade relationship between the Madoffs and Montauk where they were considered social and charitable.
“It’s all pretty awful and pretty sad,” said Joan Hegner, a broker with the Corcoran Group in Montauk, who had visited the property when it was being renovated in the early 1980s.
Over the years, Hegner, who’s sold homes since 1977, had also spoken with the Madoffs about selling the house, though they never decided to go through with it, she said.
“We assumed [once his crimes become public] that this would be the end result,” Hegner said about the looming sale. “There was really no other recourse.”
But Hegner, like other brokers, believes the court’s $7 million price tag is far too low.
Developed by David Webb, a well-known local builder, the contemporary home features 3,000 square feet across two stories, plus another 1,300 square feet in covered porches, according to East Hampton building records, putting it in the middle of the pack in terms of size. There’s also a 580-square-foot outdoor swimming pool.
The home’s deed, which is dated Nov. 20, 1980, shows the Madoffs bought it from Eugene Haas, a former town official. The following year, the Madoffs augmented the property by purchasing a tenth of an acre strip, also from Haas, for $20,000, the deed shows.
Last year, the Madoffs paid $17,067.86 in taxes on the home, though it hasn’t been reassessed since 1982, when property values in Montauk were considerably lower, brokers say.
More critically, however, the house, which was built in 1974, is nestled in dunes just above the beach, while current federal waterfront zoning laws dictate houses sit 150 feet back from shore, to prevent flooding. In fact, only a handful of homes in Montauk — grandfathered in before new zoning laws took effect — sit so close to the surf. For these reasons, brokers say the Madoffs could fetch $10 million for the home.
And unlike with other properties associated with notorious criminals, the Madoffs’ house shouldn’t have a hard time selling and for a high price, since its merits trump its history.
“This is a unique, stunning property,” says Kathleen Beckmann a local broker with Kathleen Beckmann Real Estate. “Oh, I would definitely like to get this commission.”