The band was assembled as an afterthought when Prince had recorded a bunch of instrumental tracks with Eric Leeds overdubbing saxophone. At the time of release of their first album 8 a press release touted Madhouse as the brainchild of an keyboardist from Atlanta by the name of Austra Chanel. The group, according to the official bio furtheromre consisted of drummer John Lewis, bassist Bill Lewis, and Eric Leeds, of which only Leeds is a real person.
The group's second album 16 released in november 1987, credits Dr. Fink and Levi Seacer, Jr. who played in the live-line up of Madhouse while they supported Prince on the Sign O' The Times Tour, of whom only Seacer appears, albeit only on two tracks. The fictional John Lewis is credited for drums once more while in fact the drums are by Prince again, except for two tracks where Sheila E. is the drummer.
Efforts to create a third album 24 don't come to fruition in 1988 and the project is shelved. Later, in '89/'90, efforts by Eric Leeds to create a different follow-up album to 16 – tentativdly titled 26 in the end turns into Leeds' first solo album Times Squared.
In 1994 a whole new 24 album is created, now with a line-up of Prince, Eric Leeds, Michael B. (drums), Sonny T. (bass) and Levi Seacer, Jr. (guitar). This project is also is shelved in 1995.