Bernard Madoff took $250 million (£166 million) from one of his closest friends less than a fortnight before allegedly confessing to a $50 billion financial scam, it emerged today, as investors in the fund were told that it would be at least a month before they were compensated for their losses.

Mr Madoff, who apparently confessed to his sons about the alleged fraud in mid-December, asked Carl Shapiro for $250 million in what appears to be a desperate attempt to prevent the Ponzi scheme's collapse.

A Ponzi scheme, named after the swindler Charles Ponzi, is a fraudulent investment operation that pays abnormally high returns to investors out of money put into the scheme by subsequent investors, rather than from real profits generated by share trading.

It is not clear whether Mr Shapiro, a 95-year-old entrepreneur and philanthropist, saw the cash as an investment or a loan but sources said that he was assured that the money would be returned quickly.

Mr Madoff mailed diamond jewellery and Cartier and Tiffany watches to his family and friends, according to further evidence submitted today by US prosectors that want to jail the man accused of the world's biggest financial fraud.

Marc Litt, assistant US attorney, told a Manhattan court on Monday that Mr Madoff had posted valuables over the Christmas and New Year period, violating the terms of his bail.

The fund manager, currently on 24-hour house arrest at his Upper East Side penthouse, had previously been ordered by the court not to move any of his assets, while investors who lost money in his alleged scam try to recover their cash.

Ira Sorkin, Mr Madoff's attorney, admitted on Monday that his client had sent some watches, pens, $25 cufflinks and a $200 pair of mittens to his sons Andrew and Mark, brother Peter and another unnamed couple.

Mr Sorkin insisted that the items were family heirlooms that had been sent in innocence.

But Mr Litt claimed in written testimony today that one parcel posted by Mr Madoff contained 13 watches, a diamond necklace, an emerald ring, and two sets of cufflinks. The prosecutor said that the collective value of this parcel could exceed $1 million.

“Two other packages containing a diamond bracelet, a gold watch, a diamond Cartier watch, a diamond Tiffany watch, four diamond brooches, a jade necklace, and other assorted jewelry, also were sent to relatives,” Mr Litt wrote in his evidence.

He said prosecutors had recovered these items. Mr Madoff's sons are believed to have reported him to the authorities for breaking the asset-freeze.

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