NEW YORK — A judge today allowed disgraced investor Bernard Madoff to remain free on bail, rejecting an attempt by prosecutors to send him to jail for mailing more than $1 million in jewelry to family and friends during the holidays.

The decision means Madoff will avoid having to leave the comfort of his $7 million penthouse and await trial in a cramped jail cell with nothing but bunk beds, a sink and toilet. Madoff will remain under house arrest and under the constant watch of security guards.

The ruling further outraged investors who have been clamoring for Madoff to be sent to jail for allegedly carrying out the largest financial fraud in history. They find it shocking that Madoff is free on bail, despite distributing assets that could be used to help repay investors who lost billions.

Stephen A. Weiss, a lawyer for several dozen Madoff investors, said there "are people on the street who are very unhappy" with the ruling.

"There is a thirst for blood that transcends just those who have been victimized. There is a feeling ... that folks like Bernard Madoff get a different brand of justice than the guy in the street," Weiss said.

The anxiously awaited bail decision does put additional restrictions on Madoff, including forcing him to come up with a list of items at his apartment and allowing a security firm to check on the items. The security company also will be allowed to search all outgoing mail from Madoff to ensure that no property has been transferred.