NEW YORK (Reuters) - The U.S. judge overseeing the
liquidation of Bernard Madoff's investment firm has asked
Gibraltar's supreme court to transfer $73.1 million so it may
be used to compensate victims of the imprisoned Ponzi schemer.

In a letter dated Monday, U.S. Bankruptcy Judge Burton
Lifland said the money would be used to partially satisfy a
$180 million default judgment entered on Aug. 3 against the
Vizcaya Partners Ltd hedge fund and other defendants.

In an April 2009 lawsuit, Irving Picard, the trustee
liquidating Bernard L. Madoff Investment Securities LLC,
accused Vizcaya of profiting improperly from Madoff's fraud.

Lifland entered the judgment against Vizcaya after the
British Virgin Islands-based fund failed to plead its case or
otherwise respond properly to Picard's complaint.

The judgment also applies to three other entities: Asphalia
Fund Ltd, Siam capital Management and Zeus Partners Ltd.

"At this stage," Lifland wrote in a letter to Chief Justice
Anthony Dudley of the Supreme Court of Gibraltar, "it would be
in the best interest of the BLMIS estate to turn the Gibraltar
funds over to either this court or the trustee."

The Gibraltar court took possession of the $73.1 million
last year in the course of separate litigation.

Through March 31, Picard had recovered more than $1.5
billion for Madoff victims.

He is seeking billions of dollars more from companies that
fed money to Madoff and from former Madoff clients who may have
withdrawn more money from his firm than they deserved.

Madoff, 72, is serving a 150-year sentence in a North
Carolina federal prison.

The cases are: In re: Bernard L. Madoff Investment
Securities LLC, U.S. Bankruptcy Court, Southern District of New
York, No. 08-1789; and Picard v. Vizcaya Partners Ltd in the
same court, No. 09-1154.
(Reporting by Jonathan Stempel in New York; Additional
reporting by Santosh Nadgir in Bangalore; editing by John
Wallace)