The trustee, Irving Picard, alleged that Mr. Madoff's brother, Peter, his sons, Andrew and Mark; and niece Shana all received preferential payments or fraudulent funds stemming from the fraud. The funds enriched the family members, allowing them to fund personal business ventures and purchase homes, boats and cars, according to the lawsuit. Mr. Picard is seeking at least $198.7 million, including about $141 million that allegedly was received by the family members in the six months leading up to Mr. Madoff's arrest in December 2008.

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Mr. Picard alleged that Peter Madoff, the firm's chief compliance officer, improperly received more than $60 million paid to himself, his family members and to entities on his behalf. The trustee said Peter Madoff invested only $32,146 into his own investment accounts at the Madoff firm, including just $14 after 1995, yet withdrew $16.25 million from those same accounts, at times through the fabrication of backdated trades that never took place.

According to the suit, customer funds were used to purchase homes for Peter Madoff on Park Avenue in Manhattan and in Palm Beach, Fla. Mr. Picard accused Mark Madoff and Andrew Madoff of receiving directly or through related entities $66.9 million and $60.6 million, respectively, in improper compensation and through falsified transactions between 2001 and 2008.