Allegedly responsible for a Ponzi scheme that defrauded investors of $50 billion, Madoff is free on $10 million bail and living in a luxury New York apartment, The New York Times reported Tuesday.

But, prosecutor Marc Litt said Madoff violated terms of his bail by disposing of personal assets.

Allegedly, Madoff and his wife, Ruth, sent sent packages of valuables to friends, his brother and his sons in December.

Madoff had reportedly been cooperating authorities, but his lawyer, Ira Lee Sorkin, denied those reports. "No one ever said he was cooperating with the government," Sorkin said.

He said Madoff had realized he had violated his bail and contacted lawyers to recover the valuables.

Judge Ellis ordered each side to submit legal briefs on the matter by Wednesday.

On Monday, at a House hearing on the case, Securities and Exchange Commission inspector general H. David Kotz said he would conduct a full investigation into why the fraud was not detected earlier.