The Bernard Madoff scandal widened last night when it emerged that Kevin Bacon, the actor, and his wife, Kyra Sedgwick, had been caught up in the financier's alleged $50billion (£34billion) scam.

The news is further evidence of how Mr Madoff and key hedge fund managers targeted tight social networks to entice new clients into his Ponzi scheme.

First, it was the wealthy Palm Beach golf set, then the New York Jewish community and part of the Hollywood Jewish film circle. Now it is the actors' circuit in New York.

A spokesman for Bacon, the New York-based actor who has starred in films such as Footloose, JFK, Mystic River and, more recently, Frost/Nixon, said yesterday that he and his wife, who is also an actor, had investments with Mr Madoff. Mr Bacon's spokesman said: “I can confirm that they had investments with Mr Madoff. I have no further specifics or comment beyond that.”

It also emerged that Henry Kaufman, the former Salomon Brothers economist, lost money through Mr Madoff's schemes. Other apparent victims include Steven Spielberg, the film director, and Eric Roth, writer of The Curious Case of Benjamin Button, a new hit film that stars Brad Pitt.

On Monday the drama will shift from New York to Washington, where officials of the US Securities and Exchange Commission (SEC) will be questioned by the Financial Services Committee of the House of Representatives. Barney Frank, the Democrat chairman of the panel, will want to know how the Wall Street regulator could have allowed an apparent fraud of such magnitude to take place.

Also giving evidence will be Harry Markopolos, the former chief investment officer of Rampart Investment Management, who spent ten years trying to induce the SEC to investigate Mr Madoff. Over the years, Mr Markopolos compiled detailed reports pertaining to Mr Madoff's claims that he could provide investment returns of about 12 per cent a year. In those reports, which he sent to the SEC, he included suggested questions that should be put to Mr Madoff.

The alleged scam has embarrassed the SEC and the FBI, which are trying to construct a case against Mr Madoff. The agencies discovered the alleged fraud only when Mr Madoff's sons, Mark and Andrew, told them three weeks ago about their father's investment practices.

Although the SEC interviewed Mr Madoff in 2006 to question him about the mishandling of client money, the regulator told him to register with it. At the same time, the SEC also interviewed Jeffrey Tucker, the co-founder of Fairfield Greenwich, a hedge fund that invested its clients' money through Mr Madoff.

The hearing on Capitol Hill is expected to rub salt into the wound of the SEC when David Kotz, the inspector-general of the commission, gives evidence. He conducted the immediate inquiry into why the regulator had missed what is believed to be the world's biggest scam. Mr Kotz found that the SEC had been tipped off repeatedly over the past ten years about Mr Madoff's practices but that no inquiry had been undertaken.

Under the terms of a court order issued on December 18, Mr Madoff, 70, was to assemble a detailed list of all investments, assets, loans, lines of credit and accounts held by his company and deliver it to the SEC by last night. He also had been directed to account for all assets that he held for his “direct or indirect benefit”. Ira Lee Sorkin, Mr Madoff's lawyer, said that he expected his client to meet the deadline.

Mr Madoff, who is under house arrest at his flat in Manhattan, has been charged with securities fraud. Court documents indicate that the financier told his sons on December 10 that his investment business was “just one big lie” and that he was

“finished”. He is also alleged to have told his sons that he believed the company had run up losses of about $50billion. Within two days, Mr Madoff was arrested, charged and bailed. His wife, Ruth, was ordered to find and pay for a security company to protect her husband from livid investors - and to prevent him from fleeing.

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