Hedge Fund Manager to Pay $405 Million to Madoff Victims

By MICHAEL GORMLEY

ALBANY, N.Y. -- A settlement announced Sunday will bring $405 million to victims of Bernard Madoff's (pictured, right) historic investment scam, the state attorney general said.

The clients of hedge fund manager J. Ezra Merkin (pictured, below) will receive $405 million, and New York state will get $5 million to cover the cost of the settlement worked out by Attorney General Eric Schneiderman. The victims include New York Law School, Bard College, Harlem Children's Zone, Homes for the Homeless and the Metropolitan Council on Jewish Poverty.

Schneiderman called the agreement "a victory for justice and accountability."

"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 said. "By holding Mr. Merkin accountable, this settlement will help bring justice for the people and institutions that lost millions of dollars."

Merkin's attorney, Andrew J. Levander, didn't immediately respond to a request for comment Sunday.

Merkin had managed investments for hundreds of investors in four funds: Ariel Fund Ltd., Gabriel Capital L.P., Ascot Fund Ltd. and Ascot Partners L.P. Schneiderman said many of the investors are New York residents and charitable organizations. Many of them requested not to be identified.


Most investors will get more than 40% of their losses, but only up to $5 million. Those who lost more could see additional payments, depending on the number of investors who seek reimbursement. Investors will see the terms of the settlement in the next few days, the attorney general's office said.

Merkin used his social and charitable contacts and his reputation as a money manager over two decades to raise more than $4 billion from investors, many of them charitable groups. Schneiderman said Merkin concealed Madoff's role through misleading documents and quarterly reports.

• <p> If you're looking for a quiet, safe neighborhood to raise your kids, you may want to steer clear of these cities. Based on 2011 FBI data, these are the 10 U.S. cities with populations of 100,000 or more and with the highest rates of violent crime per 1,000 residents.<br /> <br /> Source: <a href="http://247wallst.com/2012/06/11/the-most-dangerous-cities-in-america-2/">24/7 Wall St.</a></p>
• <p> Violent crimes per 1,000: 14.1<br /> Population: 295,136<br /> 2011 murders: 58<br /> Median income: $45,606<br /> Unemployment rate: 20.2%<br /> <br /> Stockton's violent crime rate has worsened from 13.8 crimes per 1,000 people in 2010. Though Stockton has long had high crime rates, the 58 murders recorded last year were an all-time record for the city. This month, to curb the increasing crime rates in the city, police decided to prioritize violent crime and to no longer respond to property crimes in the city unless certain criminal conditions were met.<br /> <br /> Source:&nbsp;<a href="http://247wallst.com/2012/06/11/the-most-dangerous-cities-in-america-2/2/">24/7 Wall St.</a></p> <p> </p> <p> PHOTO: <a href="http://en.wikipedia.org/wiki/File:Stockton_skyline.jpeg" target="_blank">Montyofarabia, Flickr.com</a></p>
• <p> Violent crimes per 1,000: 14.2<br /> Population: 626,848<br /> 2011 murders: 196<br /> Median income: $38,346<br /> Unemployment rate: 10.5%<br /> <br /> Baltimore managed to decrease its violent crime rate slightly from 14.6 per 1,000 in 2010 to 14.2 last year. This coincides with a 12 percent decrease in murders. However, Baltimore still has the sixth-highest homicide rate of any U.S. city with a population above 100,000. Baltimore&rsquo;s murder rate has been dropping steadily, but with 341 forcible rape cases in 2011 and the 11th-highest aggravated assault rate in the country, many residents are victims. In 2010, Baltimore made plans to layoff 193 police due to budget&nbsp;cuts.<br /> <br /> Source: <a href="http://247wallst.com/2012/06/11/the-most-dangerous-cities-in-america-2/2/">24/7 Wall St.</a></p>
• <p> Violent crimes per 1,000: 14.3<br /> Population: 425,533<br /> 2011 murders: 88<br /> Median income: $41,631<br /> Unemployment rate:12.1%<br /> <br /> Compared to most American cities, Atlanta has extremely high incidences of both violent and property crimes. The city&rsquo;s 8.27 aggravated assaults per 1,000 people is one of the 10 highest rates among the country&rsquo;s largest cities, as is the city&rsquo;s 70.84 property crimes per 1,000 people. Atlanta also has one of the nation&rsquo;s highest rates of motor vehicle theft, with a total of 5,371 incidents in the city last year.<br /> <br /> Source: <a href="http://247wallst.com/2012/06/11/the-most-dangerous-cities-in-america-2/2/">24/7 Wall St.</a></p>
• <p> Violent crimes per 1,000: 14.8<br /> Population: 213,258<br /> 2011 murders: 54<br /> Median income: $30,212<br /> Unemployment rate: 10.9%<br /> <br /> New on the list this year is Birmingham, which ranks among the top five cities in the U.S. for forcible rape and property crime rates. The city also has among the highest rates of burglary and larceny-theft.&nbsp;Like many other high-crime cities, Birmingham has one of the highest poverty rates in the country, at 25.1 percent. Despite the rampant crime, officials announced last year that they planned to lay off 148 employees of the sheriff&rsquo;s department in an effort to reduce the budget by $12.3 million.<br /> <br /> Source: <a href="http://247wallst.com/2012/06/11/the-most-dangerous-cities-in-america-2/2/">24/7 Wall St.</a></p>
• <p> Violent crimes per 1,000: 14.9<br /> Population: 194,988<br /> 2011 murders: 37<br /> Median income: $44,415<br /> Unemployment rate: 7.2%<br /> <br /> Though Little Rock&rsquo;s 2011 violent crime rate is down from 2010 -- when there were 15.2 violent crimes for every 1,000 people -- in many ways, the city&rsquo;s crime rate has not truly improved. Although in 2010 there were only 25 murders in the city, in 2011 there were 37. Additionally, incidents of forcible rape increased from 149 to 161, while the number of property crime incidents increased by 708, or almost 5 percent. According to the Little Rock Police Department, the total number of violent, property and arson crimes has seen a net increase since 2001, although with slight declines in more recent years.<br /> <br /> Source: <a href="http://247wallst.com/2012/06/11/the-most-dangerous-cities-in-america-2/2/">24/7 Wall St.</a></p>
• <p> Violent crimes per 1,000: 15.8<br /> Population: 652,725<br /> 2011 murders: 117<br /> Median income: $37,045<br /> Unemployment rate: 11.1%<br /> <br /> In 2011, Memphis defied the national trend of declining crime rates in major U.S. cities. The rate of violent crimes per 1,000 people increased from 15.4 to 15.8. This was the product of increases in murders, which rose from 89 to 117 cases, and aggravated assault incidents, which rose by 100 cases. A rising unemployment&nbsp;rate, which grew 1.2 percent to 11.1 percent in 2011, likely has not helped to reduce criminal behavior. With a current budget deficit of $45 million, Memphis Mayor Wharton says he may need to consider &ldquo;taking boots off the street,&rdquo; by laying off members of the police force in the near future.<br /> <br /> Source: <a href="http://247wallst.com/2012/06/11/the-most-dangerous-cities-in-america-2/3/">24/7 Wall St.</a><br /> <br /> PHOTO: <a href="http://upload.wikimedia.org/wikipedia/commons/e/eb/2011-01-08_Downtown_Memphis_TN_41.jpg" target="_blank">Wikipedia</a></p>
• <p> Violent crimes per 1,000: 16.8<br /> Population: 395,317<br /> 2011 murders: 104<br /> Median income: $49,190<br /> Unemployment rate: 15.6%<br /> <br /> Oakland historically has been among the most crime-ridden cities in California, with a violent crime rate this year of 16.8 per 1,000 people. There were 14 more murders in 2011 than in 2010, causing Oakland to maintain the ninth-highest murder rate in the country two years in a row. Oakland is the number one city for both robbery and motor vehicle theft rates in the country. Oakland city councilmember Desley Brooks, who wants to allocate $11 million in revenue to the police force, acknowledges the increased violent crime, saying, &ldquo;we cannot ignore that we have had an increase in violent crime, and so we cannot continue to do the same thing the same way and expect that it&rsquo;s going to be a different result.&rdquo;<br /> <br /> Source: <a href="http://247wallst.com/2012/06/11/the-most-dangerous-cities-in-america-2/3/">24/7 Wall St.</a></p>
• <p> Violent crimes per 1,000: 18.6<br /> Population: 320,454<br /> 2011 murders: 113<br /> Median income: $32,688<br /> Unemployment rate: 11.7%<br /> <br /> Although the total number of murders in the city has decreased by 31 since 2010, crime in St. Louis did not improve overall last year. Violent crime rates in St. Louis have risen dramatically, from 17.5 to 18.6 cases per 1,000 people. And the city&rsquo;s murder rate is still the fourth-highest in the nation, its robbery rate is the fifth-highest and its aggravated assault rate is the third-highest. Despite these troubling facts, the St. Louis Police Department recently faced potentially drastic budget cuts, which may require the elimination of 100 street-patrolling officer positions through attrition.<br /> <br /> Source: <a href="http://247wallst.com/2012/06/11/the-most-dangerous-cities-in-america-2/3/">24/7 Wall St.</a></p>
• <p> Violent crimes per 1,000: 21.4<br /> Population: 713,239<br /> 2011 murders: 344<br /> Median income: $25,787<br /> Unemployment rate: 19.9%<br /> <br /> Long regarded as one of the poorest cities in the U.S., with a 32.3 percent poverty rate and nearly 20 percent unemployment in 2010, Detroit has the second-highest violent crime rate in the country. Homicide increased by 11 percent in 2011, while robbery and aggravated assault are fourth- and second-highest in the country, respectively. Nonviolent crime is also an issue, with burglary, motor vehicle theft and arson rates in the top 10 rankings in the country.&nbsp;&nbsp;In response to an 18 percent decrease in the Detroit police budget, which will result in the elimination of 380 positions through attrition and early retirement, the city has begun taking steps to decrease police funding by introducing &ldquo;Virtual Precincts.&rdquo; The plan, which closes police stations between 4 p.m. and 8 a.m, requires citizens to report non-emergency crime to a call center, and frees up more patrol officers to respond to 911 emergency calls.<br /> <br /> Source: <a href="http://247wallst.com/2012/06/11/the-most-dangerous-cities-in-america-2/2/">24/7 Wall St.</a></p>
• <p> Violent crimes per 1,000: 23.4<br /> Population: 102,357<br /> 2011 murders: 52<br /> Median income: $22,672<br /> Unemployment rate: 18.9%<br /> <br /> According to the FBI, no city with more than 100,000 residents had a higher violent crime rate than Flint. In 2011, there were 2,392 incidents of violent crime in the city, which has a population just above 100,000. That same year, there were just 1,246 violent crimes in all 10 of the safest cities in America &mdash; which have 13 times as many residents as Flint among them. Flint has the second-highest murder rate and the highest rates of aggravated assault, burglary and arson in the nation. According to Flint Mayor Dayne Walling: &ldquo;There are too many guns on the street and it&rsquo;s easy for individuals with evil motives to take another human being&rsquo;s life.&rdquo; Though violent crime has long been a problem in Flint, in 2010, the city laid off 20 of its 140 police officers, a decision that diminished both police street presence and response times to crime.<br /> <br /> Source: <a href="http://247wallst.com/2012/06/11/the-most-dangerous-cities-in-america-2/3/">24/7 Wall St.</a></p>
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Madoff, once the Nasdaq chairman, used his reputation and savvy to dupe sophisticated investors, regulators and Wall Street banks. Merkin invested more than $2 billion with Madoff, who used money from new investors to pay returns to previous clients.

A Schneiderman spokesman said he can't speculate on the effect of the settlement on other investors who lost millions of dollars.

A Manhattan judge in September noted that the plaintiffs had cited testimony by Merkin that he was aware of a number of people who were suspicious of the returns Madoff claimed to achieve.

Madoff confessed in December 2008 that he was running a multi-decade Ponzi scheme and that more than $65 billion he claimed to have on hand for investors had dwindled to a few hundred million dollars from an original investment of about $20 billion. He pleaded guilty to fraud and is serving a 150-year prison sentence in Butner, N.C.