Jan. 30 (Bloomberg) -- Bank of New York Mellon Corp. and JPMorgan Chase & Co., under an agreement with the trustee for bankrupt Bernard L. Madoff Investment Securities LLC, will transfer about $535 million from the brokerage’s accounts.

Bank of New York agreed to transfer $301.4 million and JPMorgan said it will transfer another $233.5 million, according to court papers filed yesterday in U.S. Bankruptcy Court in New York.

The banks will send the funds to Irving Picard, the trustee liquidating the brokerage, by Feb. 6 and he agreed to indemnify the banks against any claims brought as a result of the transfers, according to court documents. A hearing on the agreements is scheduled for Feb. 4 before Judge Burton Lifland.

Picard was named trustee of Madoff Securities by the Securities Investor Protection Corp. on Dec. 15, four days after prosecutors said Madoff confessed to operating a $50 billion Ponzi scheme. Picard’s job is to liquidate the brokerage and find assets and distribute them to the firm’s customers.

According to a Federal Bureau of Investigation agent, Madoff told employees his money-management business, which was separate from his brokerage, had been insolvent for years. Madoff said he had $200 million to $300 million left from it he planned to distribute to employees, family members and friends, according to the criminal complaint.

“Mr. Madoff didn’t write the complaint,” Madoff’s lawyer, Ira Sorkin, said yesterday in a phone interview. Sorkin declined to comment on the banks’ transfer agreement.

Trustee’s Review

Picard and lawyers from his firm, Baker Hostetler LLP, are reviewing records with the help of former employees of Madoff’s offices in Manhattan, said a person familiar with the case. Judges gave Picard power to seize assets and records, demand documents, summon witnesses and enter Madoff’s residences around the world, including the apartment where he’s under house arrest.

Kevin McCue, a spokesman for Picard, didn’t immediately return a call seeking comment yesterday.

U.S. District Judge Lawrence McKenna ordered Madoff, as a condition of bail in his fraud case, to give Picard access to family homes in New York City; Montauk, New York; Palm Beach, Florida, and Cap d’Antibes on the French Riviera.

The SIPC case is Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities LLC, 08-01789, U.S. Bankruptcy Court, Southern District of New York (Manhattan). The criminal case is U.S. v. Madoff, 1:08-mj-02735, and the SEC case is Securities and Exchange Commission v. Madoff, 1:08-cv-10791, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Christopher Scinta in New York bankruptcy court at cscinta@bloomberg.net.

Last Updated: January 30, 2009 00:01 EST