U.S. prosecutors raised the pressure on jailed swindler Bernard Madoff's family on Tuesday, signaling their intent to ask for $31.5 million from loans to his sons and $2.6 million worth of his wife's jewelry.

Documents filed in U.S. District Court in Manhattan follow a previous government notice of intent to seek forfeiture this week after Madoff pleaded guilty on March 12 to running the biggest investment fraud in Wall Street history, involving as much as $65 billion over 20 years.

Madoff, 70, a former chairman of the Nasdaq stock market, is the only person charged in the fraud surrounding the family-run business, Bernard L. Madoff Investment Securities LLC, in New York.

He was arrested on December 11, and made a dramatic courtroom admission of his crimes last Thursday in front of scores of people he defrauded.

Tuesday's second government notice listed as eligible for surrender any and all ownership interest held in the name of Ruth Madoff or Bernard Madoff in 20 entities. These included some real estate ventures of Sterling Equities, co-founded by Fred Wilpon, owner of the Major League Baseball club, the New York Mets.

A spokesman for Sterling Equities said in a statement that Ruth Madoff and Bernard Madoff's brother, Peter, have made investments as passive limited partners in real estate funds sponsored by partners of Sterling and a limited number of venture capital type investments.

Any potential forfeiture of these investments will have no material impact on such ventures, the statement said.

Lawyers for the Madoffs and their sons were not available to comment.

The earlier notice said prosecutors wanted Madoff and his wife to forfeit more than $100 million worth of homes, cars, boats, securities, silverware and a Steinway piano.

Their net worth was listed as about $826 million as of December 31, 2008, with the bulk of it in the investment business.

The latest notice said the government sought any and all promissory notes executed by Andrew Madoff and/or Mark Madoff, Madoff's sons, as borrowers in favor of their parents. The notes are due in 2010 or 2012.

The seven loans amounted to $31.5 million dated between March 1, 2004 and October 6, 2008.

The notice listed various pieces of jewelry owned or held in the name of Ruth Madoff valued at approximately $2,624,340, and approximately 35 sets of watches and cufflinks owned by Bernard Madoff.

Prosecutors have said they are seeking $170 billion in forfeiture -- everything they can trace back to the fraud, but the figure has been challenged by Madoff's lawyers.

A judge jailed Madoff pending sentencing in June, but Madoff's lawyers will have an appeal heard in the U.S. Court of Appeals for the Second Circuit on Thursday.

In papers filed with the appeals court on Tuesday, prosecutors argued that Madoff should remain in jail because he was a flight risk due to the likelihood of his spending the rest of his life in jail and the magnitude of his crimes.

The government said Madoff has been shunned by the community of New York, to which he once had substantial ties; has experience living abroad as demonstrated by his ownership of a home in France; has acknowledged his decade-long history of repeatedly lying to both clients and regulators.

The case is USA v Madoff 09-213 in U.S. District Court for the Southern District of New York (Manhattan)

(Reporting by Grant McCool; Editing by Toni Reinhold)

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