Merkin put $2 billion of his clients’ money in the care of Bernard Madoff, and deceiving investors by concealing Madoff’s role in managing their money. Merkin did that in part by releasing misleading documents, including quarterly reports.
J. Ezra Merkin
J. Ezra Merkin’s Clients To Get $405 Million Settlement In Madoff Fraud
Shmarya Rosenberg • FailedMessiah.com
Clients of disgraced hedge fund manager J. Ezra Merkin will receive $405 million in a settlement orchestrated by New York State’s Attorney General Eric Schneiderman and announced today.
Merkin put $2 billion of his clients’ money in the care of Bernard Madoff, and deceiving investors by concealing Madoff’s role in managing their money. Merkin did that in part by releasing misleading documents, including quarterly reports.
Madoff pleaded guilty in 2008 to masterminding a long-running Ponzi scheme that was the largest in US history. More than $65 billion he claimed to have on hand for investors had dwindled to a few hundred million dollars. Merkin was one of his major sources of new investors.
Today’s settlement will also award $5 million to New York state to cover the cost of administering the settlement itself.
Merkin is a great-great grandson of Rabbi Samson Raphael Hirsch. His father Hermann was a major philanthropist and businessman who was a leader of the Modern Orthodox community in Manhattan. His sister Daphne is a novelist and critic who once wrote for Commentary Magazine.
Merkin’s victims include New York Law School, Bard College, Harlem Children's Zone, Homes for the Homeless and the Metropolitan Council on Jewish Poverty.
Many other victims asked not to be identified.
"Many New Yorkers entrusted their investments to Mr. Merkin, who then steered the money to Madoff while receiving millions of dollars in management and incentive fees," Schneiderman told the press today. "By holding Mr. Merkin accountable, this settlement will help bring justice for the people and institutions that lost millions of dollars."
Investors will get more than 40 percent of their losses up to $5 million, MSNBC reported. Those who had greater losses might get more than $5 million, if the number of victimized investors who seek reimbursement is low enough.
Terms of the settlement will be shared with investors over the coming days.
Merkin, a Modern Orthodox Jew who was a pillar of his East Side community and synagogue, used his extensive contacts to raise more than $4 billion from investors, many of which were charities or non-profits – including, for example, Yeshiva University and the Metropolitan Council on Jewish Poverty.
Madoff is serving a 150-year prison sentence in Butner, N.C.
Merkin has not faced criminal charges.
[Hat Tip: Seymour.]