Madoff Money Manager Settles for $410 Million
J. Ezra Merkin, a New York money manager who directed client money to Bernard Madoff, has agreed to a $410 million settlement in a lawsuit, Reuters reported.
The suit, brought in 2009, alleged that while Merkin claimed he was actively managing clients’ money, he instead funneled the cash into what would later be considered the world’s first global Ponzi scheme.
The funds will go to hundreds of Merkin investors, most of whom will get more than 40 percent of their losses, up to $5 million each, over a three-year period. Merkin raised more than $2 billion from the investors over nearly two decades, the New York attorney general’s office said in a statement.
Merkin wasn’t accused of knowing about Madoff’s scheme, but of misleading investors about how he managed their funds. “In misleading offering documents and quarterly reports, Merkin concealed Madoff’s role and misrepresented the role he was playing in managing the funds,” the statement said. “Acting primarily as a marketer and middleman, Merkin obtained hundreds of millions of dollars in management and incentive fees from his investors.”
FRONTLINE unwound Madoff’s scheme in The Madoff Affair. In the film, we showed how Merkin, president of New York’s prestigious Fifth Avenue Synagogue, was one of a few wranglers who helped steer new clients, including charities, to Madoff. The attorney general’s office said that more than 10 percent of the funds Merkin sent to Madoff were from charities and non-profit groups.
“With this settlement, Ezra Merkin has made an enormous personal commitment to addressing his investors’ losses from Madoff’s unthinkable fraud,” Steven Goldberg, spokesman for Merkin’s lawyer, Andrew Levander told CNN.
Madoff is currently serving 150 years in prison — the maximum penalty — after he pleaded guilty to 11 counts of financial violations that were estimated to have cost investors as much as $50 billion. Watch our full film here.