Jan. 8 (Bloomberg) -- Bernard Madoff’s lawyer proposed tightening the requirements for his client’s bail to keep him from being jailed after he allegedly violated a judge’s order by mailing jewelry to relatives and friends.

Prosecutors have asked U.S. Magistrate Judge Ronald Ellis in Manhattan to jail Madoff because he mailed the items, including a diamond bracelet and watches, in violation of a court-ordered asset freeze. In a letter to Ellis filed yesterday, Madoff’s defense lawyer, Ira Sorkin, said his client didn’t know the order from a related civil lawsuit applied to personal items.

“He simply did not realize that it pertained to personal items,” Sorkin wrote. “To Mr. and Mrs. Madoff, the value of these items was purely sentimental.”

The letter elaborates on arguments Sorkin made at a Jan. 5 hearing in which prosecutors requested that Madoff’s $10 million bail be revoked. Sorkin said Madoff made an innocent mistake in mailing the items and was seeking to retrieve them. Madoff was charged last month with running a $50 billion Ponzi scheme.

Sorkin said other steps besides revoking bail could be taken to address the government’s concerns. He said those measures include putting all of Madoff’s jewelry in escrow, having guards search outgoing mail, and appointing a “personal receiver” over his assets and property.

Prosecutors have until noon today to respond to Sorkin’s letter. The judge hasn’t said when he will rule and whether there will be a court hearing before he does so.

Madoff, 70, was arrested on Dec. 11 at his Manhattan apartment and charged with one count of securities fraud. He is restricted to his Upper East Side home and faces as long as 20 years in prison as well as a $5 million fine if convicted.

Watches, Ring, Bracelet

Prosecutors said Jan. 5 in a letter to the judge that Madoff mailed Cartier and Tiffany watches, a ring, a diamond bracelet and a diamond necklace in an effort to “dissipate” his assets. The property was worth more than $1 million, they said.

In response yesterday, Sorkin said the mailings started Christmas Eve as Madoff and his wife Ruth began to “reach out” to immediate family and friends by giving them a few “sentimental personal items.” That evening, Ruth Madoff set aside items accumulated over 49 years of marriage and Madoff gathered watches he’d collected over the years.

Madoff knew that, “due to the sudden change in his circumstances, he would never have an occasion to wear these watches again,” Sorkin wrote.

The couple, Sorkin said, mailed the items to their sons Andrew and Mark; to their daughters-in-law; to Ruth Madoff’s sister, Joan Roman; and to an unnamed married couple with whom they were close friends. It wasn’t until after Ruth Madoff met with lawyers on Dec. 30 that she realized they shouldn’t have done so, and the Madoffs began retrieving the items, he said.

‘Groundless’

“Fundamentally, the government’s claim that Mr. Madoff could cause harm by dissipating restitution assets is groundless,” Sorkin said.

Madoff didn’t seek to hide the existence of the jewelry, Sorkin said. He said Madoff disclosed “several millions of dollars in jewelry” in a filing with the government that he was required to make in the related civil lawsuit. The suit was brought last month by the Securities and Exchange Commission and led to the freeze order.

Sorkin also challenged the government’s claim that Madoff might flee. He said that Madoff encouraged his sons to talk to the government after Madoff told them, his wife and his brother, Peter, of the Ponzi scheme.

Madoff’s Sons

“It was Mr. Madoff himself who encouraged his sons to appraise the authorities of the exact nature of this fraud and told his sons that he intended to turn himself in,” Sorkin wrote. “The risk of Mr. Madoff’s flight in this case is virtually zero.”

Madoff’s sons also alerted prosecutors last week that they had received jewelry in the mail from their father.

Sorkin said there are “any number of ways” that “valuable portable property can be secured short of his incarceration,” including through an inventory of all of his property.

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

To contact the reporters on this story: David Glovin in New York federal court at dglovin@bloomberg.net; Erik Larson in New York federal court at dglovin@bloomberg.net.

Last Updated: January 8, 2009 00:01 EST