Sept. 9 (Bloomberg) -- Sally Schowalter pauses at the dark wood door to Bernard Madoff’s former home in Palm Beach, Florida, her eyes fixed on a U.S. Marshals Service sticker on the window warning against trespassing.

“It’s intimidating,” she tells her colleagues. “Can we take it off?”

Schowalter works for the Marshals Service, though she doesn’t carry a badge or a gun. Her job entails getting the best price for confiscated real estate such as the Florida house, appraised this year for $7.67 million by Palm Beach County. With the Madoff house, the hazards for those who work with Schowalter can be unusual -- including flying dog poop hurled by a disgruntled passerby.

As Schowalter walks through the approximately 6,500-square- foot house, she points the cleaning crew to a bathroom with grime on the countertop and a dead cockroach on the rust-colored terra cotta floor tiles. She picks up a leaf on the circular staircase leading to the master bedroom.

A federal judge ruled in June that the Marshals Service can sell the Palm Beach house, along with a house in Montauk, New York, and a penthouse on the Upper East Side of Manhattan. The Montauk house was listed last week for $8.75 million. The asking prices for the Manhattan and Palm Beach properties likely will be announced by tomorrow, said Roland Ubaldo, a marshals spokesman.

Helping Victims

Proceeds from the sales will be used to pay restitution to victims of Madoff’s Ponzi scheme, the largest in history. Madoff, 71, pleaded guilty in March and was sentenced in June to 150 years in prison for using money from new clients to pay earlier investors in a $65 billion fraud.

Schowalter flew to Palm Beach last week to make sure the five-bedroom, seven-bathroom house is clean, Madoff’s handmade Belgian shoes are out of sight and the best real estate agent is hired to market the property.

“It looks pretty good!” Schowalter says, dressed in a pantsuit, gold earrings and a matching necklace.

A contractor points to mildew growing on floor tiles in an outdoor area. Schowalter makes a phone call to a company that handles maintenance for Marshals Service properties.

“I want that taken care of ASAP,” she says.

Joining the Marshals

Schowalter, a mother of three grown children who declined to give her age, joined the Marshals Service in 2002 after a career in real estate and the mortgage industry. She was attracted by job security and the agency’s mission.

Schowalter is the real property team leader for a group of 10 people. They work out of agency headquarters in Crystal City, Virginia, just outside Washington, and manage and sell properties obtained in cases investigated by agencies including the Federal Bureau of Investigation and Drug Enforcement Administration. They also assist prosecutors in making decisions about property targeted for forfeiture.

“We have the crack house to the penthouse,” Schowalter says.

A Marshals Service contractor normally selects real estate agents to sell seized properties. With some high-value houses, Schowalter helps the contractor pick the agent in an effort to boost the sale price.

“We really do care about getting the most for the property,” Schowalter says, sitting on a leather chair in the Madoff living room, whose floor-to-ceiling windows overlook a pool and the Intracoastal Waterway. “We take it seriously.”

Interviewing Agents

During the trip to Palm Beach, she and a Marshals Service contractor interviewed five sets of real estate agents about proposals they submitted to sell the house.

To help generate interest in the property, the Marshals Service allowed a television crew inside. The video was broadcast today.

The Marshals Service asset forfeiture operation -- which also handles items such as boats, jewelry and cars -- generated $1.32 billion in the fiscal year that ended Sept. 30, 2008, according to the agency.

Proceeds from some forfeited properties go to victims. Sales of other properties pay the salaries of Schowalter and other administrative staff in the Marshals’ asset forfeiture operation.

Schowalter’s husband, Michael, jokes that crime pays -- her salary.

Furniture and Artwork

The Palm Beach house, which Madoff shared with his wife Ruth, still has most of the furniture and artwork, which are being sold separately. There are golf clubs in a rack next to the front door, an antique U.S. flag on the living room wall and a glass display case featuring ropes tied in various knots.

The Marshals Service packed items such as clothing, artistic birds nests mounted in the living room rafters, along with statues, figurines and paintings of bulls.

“We’ve taken away things that screamed Bernie Madoff,” Schowalter says.

Walking through the master bedroom, with a vaulted ceiling, dark wood floors and his-and-hers bathrooms and closets, Schowalter says she wants to keep buyers focused on the property, not Madoff.

Taking a break from cleaning, a Marshals Service contractor, Mike Clawson, tells Schowalter of the difficulties he has encountered as he has tended to the 20-foot-tall ficus hedge in the front yard and the rest of the trees and greenery that provide privacy from the houses immediately next door.

People have walked by cursing him, assuming he works for Madoff, says Clawson, as he chomps on a cigar from the Dominican Republic. One woman hurled a bag of dog excrement at him, narrowly missing, he says.

To contact the reporter on this story: Justin Blum in Palm Beach, Florida, at jblum4@bloomberg.net

Last Updated: September 9, 2009 13:33 EDT