Money Manager Merkin Fires Back at Madoff-Related Charges

New York City money manager J. Ezra Merkin, charged today with misusing client funds and funneling billions of dollars into the Ponzi scheme run by Bernard Madoff, is coming out swinging in his fight against prosecutors.

In a statement just released by his attorney, Andrew Levander, Merkin dismisses the civil lawsuit filed by New York Attorney General Andrew Cuomo as “hasty and ill-conceived.”

“The evidence shows that this lawsuit is without merit,” Levander said on behalf of Merkin.

Merkin owned Gabriel Capital Corporation and despite his best efforts to watch over his client’s investments, he was “thwarted by the intricate, fraudulent scheme perpetrated by Madoff,” his attorney said.

New York state prosecutors today accused Merkin of lying to investors about where their money was going and hiding his link to Madoff’s $65 billion Ponzi scheme. They said he funneled at least $2.4 billion into Madoff’s criminal enterprise and used investor funds to purchase millions of dollars in art for himself and rack up other personal expenses.

However, Merkin’s attorney said clients who invested in the Ascot Funds managed by his firm “were well aware that the money was being invested with Madoff” and that “investors in all of the funds expressly authorized Mr. Merkin to allocate assets in third party managers such as Madoff.”

Other Feeder Fund Previously Charged

Massachusetts prosecutors recently accused a hedge fund manager, Fairfield Greenwich Group, of pumping about $7 billion into fraudulent investments controlled by Madoff. Those civil charges, now joined by similar accusations by New York officials against Merkin, show a broadening of the government’s probe into Madoff’s criminal enterprise.

It is clear that federal securities investigators and state prosecutors are not satisfied with simply taking down Madoff. To the contrary, we now see that they are determined to get to the bottom of the entire scope of the financial scandal.

Money managers who placed investor funds with Madoff knowing that he was running a financial smoke and mirrors job must be held accountable. In the end, with so many of Madoff’s assets locked up or hidden away, it may be the only real shot of finding some sort of reimbursement for thousands of defrauded investors.

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