There are unlikely to be many residents in the smart apartment block at 133 East 64th Street in Manhattan who sport an electronic tagging device around their ankle. There will be even fewer in the building, on the corner of Lexington Avenue in the Upper East Side, who have been put under a 7pm-to-9am curfew by a public prosecutor.

Yesterday, however, one resident, Bernard Madoff, the 70-year-old investor accused of devising the world’s biggest fraud, was ordered by a New York prosecutor to wear an electronic tag, hand over his passport and succumb to a curfew close to house arrest.

With Mr Madoff struggling to convince his rapidly diminishing circle of friends to cough up the remaining $3 million (£1.9 million) to meet the terms of his bail, Marc Litt, the New York assistant attorney-general, yesterday issued onerous new bail terms while the US Securities and Exchange Commission and the FBI scrambled to construct a fraud case against the man who was described this week by a Manhattan tabloid as “The Most Hated Man in New York”.

When Mr Madoff was first charged with one count of fraud last week, having confessed to creating a huge Ponzi scheme with estimated losses of $50 billion, he was bailed on condition that he could raise $10 million, secured by four guarantors. Only his wife, Ruth, has since come forward as one of the co-signatories, having been forced to use their Upper East Side apartment — estimated to be worth about $7 million — as collateral for part of her husband’s bail.

With Mr Madoff unable to raise the remaining sum, Mr Litt seized two other properties owned by the couple — one in upstate New York and the other in Palm Beach, Florida.

While most of Mr and Mrs Madoff’s neighbours — who, according to a political donation website, work for banks such as Credit Suisse and UBS — will be spending the next few days Christmas shopping in the designer shops just blocks away on Madison Avenue, the Madoffs have until Monday to find the remaining $3 million so that the financier can leave his flat in the evening.

Mr Madoff’s new bail sheet could not be a more stark reminder of the gulf between the life that he and his wife and two sons led less than a week ago and his current predicament.

Last Wednesday, in the offices of Madoff Securities in the Lipstick Building just a short walk away, Mr Madoff told his two sons, Mark and Andrew, that he was “finished”. He told them that his investment business was “all just one big lie” and that it was “basically, a giant Ponzi scheme”.

According to the US Attorney Southern District of New York office, which charged Mr Madoff with securities fraud on Thursday, he also told his sons that he estimated losses in one of his businesses at $50 billion. Mr Madoff said that he had planned to disburse his remaining $200 million to $300 million to employees, friends and relatives and then turn himself in to the authorities. Mr Madoff’s sons, who claim to have also lost millions, approached regulators before their father had time to change his mind, and shopped him to the FBI.

As Mr Madoff and his wife seek to pull in favours for the $3 million sum, it is believed that regulators are focusing on two strands of the investment scam. They are investigating the possibility that one reason that regulators were blind to Mr Madoff’s activities was that he created a second, shadow investment vehicle. They are also seeking to identify who else would have known about Mr Madoff’s dubious business behaviour — with forensic accountants convinced that he could not have controlled a fraud of this size alone. Mr Madoff’s two sons this week issued a statement insisting that they were victims of their father’s scam, and not perpetrators.

As the Madoffs scratch around for spare cash, Ruth may well hope that her husband’s new notoriety may provide a pre-Hanukkah rush for her cookbook, The Great Chefs of America Cook Kosher. Last night, a copy of the spiral-bound book was available on Amazon for $34.14.

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