Merkin says he didn’t know
The New York attorney general has added another name to the list of people charged in connection with Bernie Madoff’s Ponzi scheme. Money manager J. Ezra Merkin was charged today. Merkin says he was stunned to learn of Madoff’s scheme, and Merkin’s attorney has called the state’s lawsuit “hasty and ill-conceived.”
Merkin’s role
Merkin is accused of playing the role of a “feeder” in Madoff’s scheme, directing cash advances and funds meant for other causes into Madoff’s accounts. New York’s lawsuit says Merkin funneled more than $2.4 billion to Madoff.
“Merkin duped individual investors, non-profits, and charities into believing he was responsibly managing their investments, when in actuality he was dumping them into history’s largest Ponzi scheme,” New York Attorney General Andrew Cuomo said.
Merkin’s profits
Cuomo says Merkin pulled in $470 million in payments for money management and incentive fees from Madoff. The State of New York isn’t the first entity to file a lawsuit against Merkin for his alleged role in the scheme. New York University and the publisher of the New York Daily News, Mort Zuckerman, have already filed suits against Merkin.
Merkin’s history
Merkin is a well-known philanthropist in New York. He used to be chairman of GMAC Financial Services, the financing arm of General Motors Corp. Merkin operated two funds, Gabriel Capital and Ariel Fund, that acted as “feeder” funds for Madoff.
Merkin’s knowledge
Merkin and his attorney, Andrew Levander, maintain that Merkin knew nothing about Madoff’s scheme. Levander says he will vigorously defend his client, and that Merkin had performed “extensive due diligence” on Madoff.
Cuomo’s lawsuit says Merkin ignored numerous red flags, and Merkin was aware that investment professionals were suspicious regarding Madoff’s activities.
Madoff’s fate
Bernie Madoff was convicted in March of running a Ponzi scheme that swindled billions from his customers. Madoff, 70, will be sentenced June 16. He will likely spend the rest of his life in jail. He could receive a sentence of up to 150 years.
What? Ezra Merkin was stunned? Being the professional money manager he was “classified” as, I find that a bit too hard to believe. How can you not notice or even suspect something was out of line when the whole thing was happening right in front of you? Clearly, you must be experiencing a mild case of amnesia or you are just an absolute idiot.
I hope that the Madoff thing doesn’t turn into a witch hunt where anyone who had anything to do with him, regardless of guilt gets arrested, as guilt by association is a form of discrimination that shouldn’t be tolerated. That said, if this guy is as guilty as he looks, he’ll be right there in the cell with Bernie.