FEDERAL investigators working through the weekend to unravel Bernard Madoff's alleged US$50 billion Ponzi scheme found evidence he ran an unregistered money-management business alongside his firm's brokerage and investment-advisory units, two people with knowledge of the inquiry told Bloomberg.

Clients of the undisclosed business appear to have included hedge funds, according to the people, who declined to be identified or to name the funds because the probe isn't public, the agency said.

Madoff could not be immediately reached for comment by Reuters.

The former chairman of the Nasdaq Stock Market is best known as the founder of Bernard L. Madoff Investment Securities LLC, the closely-held market-making firm he launched in 1960.

But he also ran a hedge fund that US prosecutors said racked up US$50 billion of fraudulent losses.

Madoff was charged in a criminal complaint last week with a sole count of securities fraud, a charge that carries up to 20 years in prison. He has been released on US$10 million bail. -- REUTERS