Hedge Fund Manager to Pay $405 Million to Madoff Victims

Bernard Madoff leaves US Federal CourtBy 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.

J. Ezra MerkinSchneiderman 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.

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.

Increase your money and finance knowledge from home

Economics 101

Intro to economics. But fun.

View Course »

Managing your Portfolio

Keeping your portfolio and financial life fit!

View Course »

Add a Comment

*0 / 3000 Character Maximum


Filter by:
RW Kent

Preet Bharara’s office worked together with the trustee overseeing the liquidation of Bernard L. Madoff Investment Securities LLC to secure a $7.2 billion settlement with the estate of Jeffrey Picower – the largest forfeiture in U.S. history.[18] The money will be used to compensate victims of Madoff’s fraud. His office is also handling the criminal prosecutions of several employees at Madoff’s firm and their associates. The investigation remains ongoing.

June 26 2012 at 6:07 AM Report abuse rate up rate down Reply

The Jews, the lawyers and the trustee's will suck up all the money..There will be nothing left by the time they get done with it

June 25 2012 at 5:38 PM Report abuse -3 rate up rate down Reply

BO should appoint Madoff "Social Security Czar".....lol.

June 25 2012 at 4:19 PM Report abuse +1 rate up rate down Reply

This guy ripped off people from NY to Kingdom Come---he owes soooo much more----move on down to Corpus Christi, Please

June 25 2012 at 3:40 PM Report abuse +1 rate up rate down Reply

As usual, victims 405 million. State, 500 million. I thought we paid taxes in part for the state to enforce the laws, why are they getting a slice of the pie let alone the biggest slice.

June 25 2012 at 3:40 PM Report abuse rate up rate down Reply
3 replies to otravlin's comment

put the bastard in jail too.

June 25 2012 at 3:32 PM Report abuse +2 rate up rate down Reply

Yeah, right the victims will get money. Lawyers, banks and the well connected will get most of it.

June 25 2012 at 3:04 PM Report abuse +3 rate up rate down Reply
Terry and Mandy

And the cockroaches keep coming out of their hiding places and into the light of day.

June 25 2012 at 1:14 PM Report abuse +2 rate up rate down Reply
1 reply to Terry and Mandy's comment
Hi Kwiss!!

While I certainly agree with you, I'd like to see the people punished who intentionally delayed the call to Orkin.

June 25 2012 at 2:14 PM Report abuse +4 rate up rate down Reply

Seems like this guy needs to be in jail too or at least banned from industry?

June 25 2012 at 12:58 PM Report abuse +4 rate up rate down Reply

Bernie owes me some money too, please send to my po box 3651 Brockton MA 02301 a cool million and i will allow no further action against the defendant

thank you

June 25 2012 at 11:59 AM Report abuse +2 rate up rate down Reply
1 reply to kouracles's comment

just thinking the same thing, lol

June 25 2012 at 3:38 PM Report abuse +3 rate up rate down Reply