Bernard Madoff's sons reported the shamed fund manager to the authorities for mailing them at least $1 million worth of valuables, giving US prosecutors vital ammunition in their attempts to have the alleged fraudster's bail revoked.

At a bail hearing yesterday, prosecutors asked that Mr Madoff be removed from 24-hour house arrest, which he is spending at its $7 million Manhattan apartment, and jailed after he contravened a court order to freeze his asset freeze.

Marc Litt, assistant US attorney, argued in court that at least one of the valuables posted to Mr Madoff's sons and brother Peter were worth $1 million.

Ira Sorkin, Mr Madoff's lawyer, said: "We believe the children brought it to the attention of the Government".

Peter Madoff was the chief compliance officer at Bernard L Madoff Investment Securities, while Mr Madoff's sons Andrew and Mark worked in the proprietary trading part of the business.

None of the three have been charged with any wrongdoing as part of the legal investigation into Mr Madoff's alleged $50 billion swindle.

His sons were also responsible for revealing Mr Madoff's scam after he confessed to them and they in turn told the Securities and Exchange Commission, the US regulator, and the FBI.

Mr Madoff's assets were frozen as part of a civil law suit by investors who lost savings in what is believed to be the world's largest financial fraud.

Ira Sorkin, Mr Madoff's attorney, argued yesterday that the objects mailed were heirlooms sent innocently to family members. The items included watches, pens, jewellery, a pair of $200 mittens and some $25 cufflinks, Mr Sorkin said.

They were posted on Christmas Eve and Mr Sorkin learned of the transfer on December 30. Some of the items were sent by Ruth Madoff, Mr Madoff's wife.

The lawyer said that he had also told the authorities about the transfer.

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