Federal prosecutors said yesterday a review they conducted shows that about half of Bernard Madoff’s customers had not lost money when his business shut down.

In papers filed at Manhattan federal court, the prosecutors told a judge there was no need to order restitution because all of Madoff’s assets will be distributed to investors anyway.

Prosecutors also suggested that New York lawyer Irving Picard, the court-appointed bankruptcy trustee in the Madoff case, be in charge of distributing funds. Picard has come under fire from the Ponzi fraudster’s victims for earning hefty fees even as they face losses.

“Picard will end up richer than Madoff from this appointment,” said attorney Helen Chaitman, who represents numerous Madoff victims.