| NEW YORK, June 24
NEW YORK, June 24 Money manager Ezra Merkin has
agreed to pay $410 million to settle a lawsuit brought by the
New York attorney general that accused Merkin of steering client
money to Ponzi schemer Bernard Madoff, a person familiar with
the settlement said on Sunday.
Justice Richard Lowe of New York state court signed off on
the settlement on Friday, the person said, and it is expected to
be announced on Monday. The person asked not to be identified
because of not being authorized to talk about the matter.
Under the agreement, Merkin will pay $405 million to
compensate investors over three years, the person said. The
other $5 million will go to the state.
Attorney Andrew Levander, who represents Merkin, did not
immediately respond to an email seeking comment on Sunday.
Jennifer Givner, a spokeswoman for Attorney General Eric
Schneiderman, could not be reached for comment.
The settlement does not resolve a separate case brought
against Merkin by Irving Picard, the trustee seeking money for
all of Madoff's victims. Picard is trying to claw back $500
million that Merkin and his funds withdrew from accounts with
Amanda Remus, a spokeswoman for Picard, did not respond to
an email seeking comment on the status of any settlement talks
with Merkin over Picard's suit.
The New York lawsuit, brought in 2009 by Andrew Cuomo, the
attorney general at the time, said Merkin "recklessly" fed money
from investors in his funds into Madoff's Ponzi scheme, while
claiming he actively managed their money.
Merkin held himself out as an "investing guru" and collected
more than $470 million in management and other fees while he was
really a "master marketer," the lawsuit said.
The lawsuit accused Merkin of self-dealing, reckless conduct
and gross negligence. It sought restitution and damages and to
stop Merkin from serving on any nonprofit organization or as an
Merkin had some $2.4 billion invested with Madoff, according
to the lawsuit.
Merkin, a graduate of Columbia College and Harvard Law
School, was a trustee, along with Madoff, of Yeshiva University.
The university lost $110 million to Madoff.
Charities and other nonprofits are among those whose funds
went to Madoff through Merkin without their knowledge.
Merkin resigned as nonexecutive chairman of GMAC LLC, the
financing arm of General Motors, after the Madoff scandal. GMAC
is now Ally Financial.
Madoff pleaded guilty in March 2009 to perpetrating the
largest Ponzi scheme in U.S. history and is serving a 150-year
As of May 18, Picard has recovered or entered into
agreements to recover more than $9 billion, over half the $17.3
billion in principal estimated lost by Madoff firm customers who
filed claims, according to the trustee's website.
The New York case is New York v. Merkin New York state
Supreme Court, No. 450879/2009.
The trustee case is Irving H. Picard v J. Ezra Merkin, et
al, U.S. Bankruptcy Court for the Southern District of New York,