In a ruling that provided limited satisfaction to investors wiped out in what may be the largest Ponzi scheme ever, Magistrate Judge Ronald L. Ellis ordered Madoff to take an inventory of the items in his $7 million apartment and submit his outgoing mail to security checks.

Prosecutors said they would ask another judge to jail Madoff while he awaits trial.

"There is a thirst for blood that transcends just those who have been victimized," said attorney Stephen A. Weiss, who added that some of his several dozen Madoff investors "just want to have this guy's head."

Sweeping aside the emotions of the case, the judge cited laws requiring that defendants be allowed to stay out on bail before trial unless they are a danger to the community or a threat to flee.

Those standards make it difficult for prosecutors to have white-collar defendants jailed before trial. The judge noted suspects in nearly 75 percent of federal fraud cases are granted bail.

Prosecutors said they planned to appeal the ruling and ask another judge to revoke Madoff's bail. The judge stayed his ruling for 48 hours, meaning the new restrictions will not take effect right away.

The judge also said restrictions in a separate civil case that apply to property under Madoff's control would apply to the criminal case — meaning moving money around by computer would violate his bail conditions.

But in keeping Madoff out of jail for now, Ellis said it did not matter that Madoff was charged in what appears to be the largest Ponzi scheme in history, that Madoff is publicly vilified or that a conviction might bring a long prison term.

Lennar Corp. shares took a beating Friday morning after self-proclaimed fraud buster Barry Minkow criticized the financial structure of some of its deals.

Shares of the nation's second-largest homebuilder (NYSE: LEN) were down $2.20 to $9.22 shortly before noon.

Minkow, who served more than seven years for a stock fraud involving carpet-cleaning company ZZZZ Best, released a list of what he termed 10 red flags involving Lennar. He now operates the Fraud Discovery Institute and has posted details of his allegations at www.frauddiscoverynetwork.com.

Lennar provided "vague and less-than-transparent responses to the SEC inquiries about off-balance sheet, joint-venture debt,” the institute alleges.

Minkow’s group alleges that the builder has “exhibited a pattern of behavior over a sustained period of time of deceptive business practices, ranging from building homes using Chinese drywall to cut costs, to causing the California Public Retirement Fund (CALPERS) to lose approximately $1 billion.”

Lennar said it was working on a response to Minkow’s allegations.

The institute said it has sent a letter of complaint to the Securities and Exchange Commission, the FBI and the IRS.

The SEC is examining whether the hedge fund, Pequot Capital Management, traded Microsoft Corp. shares on confidential information provided by a former employee of the technology company that it hired, a person familiar with the inquiry said Thursday.

The person spoke on condition of anonymity because the SEC has not publicly acknowledged reopening the probe. SEC spokesman John Nester declined to comment Thursday.

New information that surfaced last month revived interest in the case. Documents that emerged in a divorce proceeding in Connecticut showed that Pequot began paying $2.1 million to a key witness in the case in mid-2007.

The documents show a payment by Pequot of $700,000 at that time to David Zilkha, a former Microsoft employee later hired by the hedge fund. Zilkha received an additional $700,000 in mid-2008 and was slated to receive the same amount this year, according to the documents in the divorce case between Zilkha and his ex-wife, Karen Kaiser.

"To me it smells like hush money, but I have no idea," her attorney, Mark Sherman, told The Associated Press Thursday.

Zilkha's lawyer, Norm Pattis, declined to comment.

Pequot, a $4.3 billion hedge fund based in Westport, Conn., and its founder and chairman, Arthur Samberg, have denied any wrongdoing.

Pequot spokesman Jonathan Gasthalter said the payments to Zilkha were made "pursuant to the settlement of a civil claim related to his employment and termination by Pequot that was first presented to the firm in January 2007 after all investigations had been closed."

Gasthalter said Pequot will cooperate fully with all requests for information and is confident that its trading in Microsoft shares "was at all times proper."

Goldstein, 76, was among the thousands of investors who trusted Wall Street figure Bernard Madoff with their money while counting on federal regulators to protect the investing public from fraud.

"Somewhere inside of me was the thought that this was a regulated industry. It wasn't. The warning flags were just pushed aside," Goldstein told a House panel Monday.

Red flags were raised to the Securities and Exchange Commission over a decade but weren't pursued, and Republican and Democratic House members said that reflected deep, systemic problems at the market watchdog agency.

Goldstein, a retired New York fabrics distributor, was among the witnesses as the House Financial Services Committee looked into why the SEC failed to uncover what may be a swindle amounting to $50 billion.

Goldstein testified that "everything I worked for over a 50-year career is gone." He held an IRA retirement account with Madoff's firm for 21 years.

Now, he says, he's been forced to cash in life insurance policies to cover his mortgage, but "just can't make it" past April. The only choice he says he has is to sell his home — which he fears he won't be able to do in a housing market that has collapsed.

In a New York City courtroom Monday, a federal prosecutor asked that Madoff be jailed pending trial, saying the disgraced financier violated an agreement with the court by mailing watches, jewelry, cufflinks and mittens worth more than $1 million to relatives and friends. The judge said he would rule on the request after both sides submitted written arguments.

"The defendant's recent actions amount to obstruction of justice," Assistant U.S. Attorney Marc Litt told a judge at a hearing in federal court in Manhattan.

U.S. District Magistrate Ronald Ellis asked the lawyers to submit written arguments and said he would rule later.

Madoff's lawyer, Ira Sorkin, described the items as heirlooms that included cufflinks and antique watches. He said they were not significant assets. The items were sent to Madoff's children and to unidentified friends vacationing in Florida.

"We maintain it happened innocently," Sorkin said. "He's not a threat to the community and there's no danger he's going to flee."

Madoff later left the courthouse, riding away in a silver sedan while surrounded by a swarm of cameras, and returning to his Upper East Side apartment.

The 70-year-old former Nasdaq stock market chairman was arrested Dec. 11 on securities fraud charges alleging he duped investors out of as much as $50 billion in a giant Ponzi scheme.

The prosecutor told the judge the case against Madoff "is strong and getting stronger."

Madoff, who owns yachts and mansions in New York's Hamptons and Palm Beach, Fla., has been confined to his Manhattan apartment under house arrest.

Susan Markel, chief accountant in the agency's division of enforcement, is taking a job in the corporate investigations practice of AlixPartners LLP, a business advisory firm. Markel has been at the SEC since 1994, working on the agency's inquiries into Xerox Corp., Cendant, WorldCom and Cardinal Health Inc.

The SEC has come under fire for failing to heed warnings about Wall Street money manager Bernard L. Madoff, whose alleged fraud may end up costing investors $50 billion.

The SEC said Tuesday that Susan Markel, chief accountant in the agency's division of enforcement, is taking a job in the corporate investigations practice of AlixPartners LLP, a turnaround consulting firm.

Her departure comes as President-elect Barack Obama's SEC chairman-designate, Mary Schapiro, is likely to face tremendous pressure to bring sweeping changes to the agency, said James Cox, a Duke University law professor and securities law expert.

The SEC has come under fire for failing to detect signs that major Wall Street firms were in trouble. It also has been criticized for ignoring allegations brought to SEC staff about Wall Street money manager Bernard Madoff's businesses. Madoff has been accused of engaging in a massive fraud that may end up costing investors $50 billion.

With the SEC under intense scrutiny from the incoming administration and lawmakers a Capitol Hill, more high-level staff changes could be in the works, Cox said.

For current staffers, it is often better "to leave on your own accord than to face the awkwardness of being asked to leave," he said.

Markel has been at the SEC since 1994, working on the agency's inquiries into Xerox Corp., Cendant, WorldCom and Cardinal Health Inc.

Linda Chatman Thomsen, director of the SEC's Division of Enforcement, praised Markel saying in a statement that "her instincts are superb and her investigative abilities are unparalleled"

Obama has promised a tougher regulatory and enforcement approach after he takes office on Jan. 20.

"Instead of appointing people with disdain for regulation, I will ensure that our regulatory agencies are led by individuals who are ready and willing to enforce the law," Obama said earlier this month.