Bernie Madoff Money Manager J. Ezra Merkin Forced To Cough Up $410 Million To Repay Victims
The man who controlled four funds that invested more than $2 billion with convicted ponzi-schemer Bernie Madoff on behalf of hundreds of investors -- including several charitable organizations -- is gonna have to cough up some serious coin to repay victims who lost loads of cash.
New York Attorney General Eric Schneiderman announced this morning that his office has reached a settlement with J. Ezra Merkin to the tune of $410 million, $405 million of which will go towards repaying investors who lost money.
"I am proud to announce that we have recovered over $400 million for the investors and charities that were harmed by history's largest Ponzi scheme. This agreement is a victory for justice and accountability," Schneiderman says. "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. By holding Mr. Merkin accountable, this settlement will help bring justice for the people and institutions that lost millions of dollars."
Merkin controlled four funds -- the Ariel Fund Ltd., Gabriel Capital L.P., Ascot Fund Ltd. and Ascot Partners L.P. -- that handed money over to Madoff to invest on behalf of his clients. In exchange for managing the investors' cash, Merkin received hundreds of millions of dollars -- despite the fact that Madoff did the majority of the "investing."
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In other words, Merkin told investors that he would be managing the money. However, he just handed it off to Madoff -- while collecting "management fees" -- who then lost more than $1.2 billion.
Schneiderman says Merkin duped investors by providing misleading documents and quarterly reports that concealed Madoff's role and misrepresented the role he was playing in managing the funds. According to Schneiderman, Merkin acted "primarily as a marketer and middleman."
According to the AG's Office, depending on the size of their losses, eligible investors will be "entitled to receive over 40 percent of their cash losses. Pursuant to a claims process, investors who were not aware of Merkin's delegation to Madoff will receive a defined percentage of their losses, while those who were aware of Madoff's role will be eligible to receive a smaller recovery."
Additionally, all investors will receive even more cash in the future when the Madoff Estate is able to distribute moneys recovered by Irving Picard, the Securities Investor Protection Corporation Trustee for the liquidation of Madoff's Estate.
Of the $410 million, $5 million will cover costs incurred while building a case against Merkin.
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