Financier J. Ezra Merkin Agreed to Step Down as Manager of His Hedge Funds and Place Them in Receivorship
The Wall Street Journal reports that financier and money manager, J. Ezra Merkin, agreed to New York Attorney General Andrew Cuomo’s demands to step down as manager of his hedge funds and place them into receivership. Cuomo charged Merkin with civil fraud last month for funneling $2.4 billion from universities and nonprofit organizations into Bernard Madoff’s firm. Cuomo alleged Merkin “betrayed hundreds of investors” by repeatedly lying to them about how he invested their money. Attorneys from Cuomo’s office presented the agreement to Justice Richard Lowe III in New York State Supreme Court on Tuesday morning.
The agreement means Merkin will no longer control his three hedge funds: Ascot, Gabriel, and Ariel. Two receivers were named to manage the funds. One receiver will be responsible for managing the remaining money, nearly $1 billion, in the Gabriel and Ariel funds. Another will oversee Ascot, whose entire $1.8 billion in assets were lost in Madoff’s Ponzi scheme. Cuomo is expected to submit a formal agreement next week, giving time to New York University to review the agreement. NYU, New York Law School, and Mortimer Zuckerman’s charitable trust have sued Merkin as well.
The trustee in charge of recovering Madoff investors’ assets, Irving Picard, has also recently sued Merkin seeking the return of about $558 million that his funds withdrew from Madoff’s firm.
SS
Posted in: