By Jonathan Stempel

NEW YORK, July 26 (Reuters) - The trustee seeking money for Bernard Madoff's former clients has asked a bankruptcy judge to release roughly $1.49 billion to $2.43 billion in recovered funds to compensate victims, several times more than they have received so far.

Irving Picard, the trustee, said on Thursday that the payout would cover more than 1,220 customer accounts, and bring total payments so far to as much as 50 percent of the claims currently being allowed.

This would be the second payout to victims of the Ponzi scheme, which unraveled in late 2008. Picard said he was making the request to the court now because two legal obstacles were recently removed.

While the trustee has recovered about $9.14 billion, just $336 million has been distributed so far. A large chunk of the recoveries have been put in reserve because of litigation with victims who contend they are owed more.

The requested payout requires approval by U.S. Bankruptcy Judge Burton Lifland in Manhattan.

Picard said part of the money included in the distribution request comes from the $5 billion forfeited by the estate of Madoff investor Jeffry Picower. A deadline to appeal the Picower forfeiture order expired on July 16.

Also, the U.S. Supreme Court last month let stand a lower court decision upholding Picard's "net equity" method for calculating losses of former customers at Madoff's defunct firm, Bernard L. Madoff Investment Securities LLC.

Picard had measured losses as the difference between the amounts that customers deposited and the amounts they withdrew from the Madoff firm before the fraud was uncovered. Some customers wanted recoveries based on their final account statements, even if the amounts shown were made up.

David Sheehan, a lawyer for Picard, said in a statement that some of the remaining objections are "specious at best." He nonetheless said the trustee must hold some money back to account for the objections, at least until a final court order is in place to allow for larger distributions.

Picard has estimated that Madoff victims lost about $20 billion from the fraud.

The trustee has also been appealing decisions by federal judges in New York that rejected his claims against large banks that did business with Madoff and "feeder funds" that funneled customer money to Madoff.

Madoff, 74, pleaded guilty in March 2009 and is serving a 150-year sentence in a North Carolina federal prison.

The case is Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities LLC, U.S. Bankruptcy Court, Southern District of New York, No. 08-ap-01789. (Reporting By Caroline Humer and Jonathan Stempel in New York; Editing by Martha Graybow, Bernard Orr)