March 16 (Bloomberg) -- Victims of Bernard Madoff may get less than $10 million in proceeds when the businesses of the alleged $65 billion Ponzi-scheme operator are sold, according to analyst estimates.

The Madoffs valued their net worth Dec. 31 at $826 million, including $700 million for Madoff’s ownership in Bernard L. Madoff Investment Securities LLC, according to a March 13 court filing. The firm’s brokerage has since been valued at no more than $10 million, according to Larry Tabb, founder of TABB Group, a financial-market research and advisory firm. The firm’s money management unit is likely to be unsaleable, analysts said.

“The $700 million number is probably a figment of Madoff’s imagination,” said Stephen Harbeck, president of the Securities Investors Protection Corp., which is overseeing the liquidation of Madoff’s New York-based brokerage. “He put that value on the business while he was still conducting the fraud.”

The U.S. government said in a court filing yesterday that it will seize personal assets, valued by the Madoffs in December at more than $100 million, including homes in Manhattan, Montauk, New York, Palm Beach, Florida, and France. The trustee liquidating Madoff’s brokerage on behalf of SIPC, Irving Picard, said Feb. 4 he had recovered about $946 million in cash and securities for customers of the bankrupt company. Today, Picard said he hired a law firm to seek recovery of Madoff assets in Gibraltar.

Madoff, 70, pleaded guilty March 12 in Manhattan federal court to defrauding investors of as much as $65 billion. He faces a 150-year sentence for using money from new investors to pay off old ones in a global fraud that ran from at least the early 1990s.

Potential Bidders

The brokerage, which is being marketed to potential bidders, had earnings of just $1.12 million last year from its market-making and proprietary trading businesses, according to documents drawn up by investment bank Lazard Ltd.

“The brand has no value because no one in his right mind would want to open a brokerage named Madoff,” Tabb said. “You’re buying trading desks, computers, back office software and routing systems -- and every day the business isn’t sold the value goes down and down.”

As for Madoff’s money management business, “it is highly unlikely there will be anything of consequence to sell,” said Daniel Seivert, chief executive officer of ECHELON Partners, an investment bank for money management firms in Manhattan Beach, California,.

‘Track Record’

“Investment management firms primarily sell off of the recurring fee revenue they generate and the track record of the investment professionals managing the money,” Seivert said. “Given the gravity of the surrounding events, it is highly unlikely that any of the assets will stay with the organization and the track record of the investment professionals is likely unverifiable.”

In addition, Madoff ran a trading operation in London that invested his family’s money, Madoff Securities International Ltd. The firm, which is being liquidated by the accounting firm Grant Thornton LLP, received more than $250 million in Madoff investors’ money for trading and for the family’s personal use, according to court filings.

The SIPC’s Harbeck said today he didn’t know if any of the money funneled to London was included in Picard’s tally of $946 million in liquid assets. Picard’s spokesman Kevin McCue didn’t answer an e-mail seeking comment. A Grant Thornton spokesman, Simon Rothschild, declined to comment.

The case is U.S. v. Madoff, 08-mag-2735, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Linda Sandler in New York at lsandler@bloomberg.net.

Last Updated: March 16, 2009 17:56 EDT