Merkin Charged for Shifting $2.4 bln to Madoff’s Ponzi Scheme

According to Foxbusiness, financier J. Ezra Merkin was charged Monday with fraud by the New York Attorney General’s Office for his role in steering billions of dollars of investors’ funds into Bernard L. Madoff’s massive Ponzi scheme.

Merkin, according to a statement issued by the Attorney General’s office, “ignored irregularities and other glaring red flags related to Madoff’s investments.”

The 54-page complaint filed in New York State Supreme Court states that Merkin collected $470 million in management and incentive fees in return for funneling $2.4 billion to Madoff.

Here is the response to New York Attorney General Cuomo’s charges from Andrew Levander, counsel for J. Ezra Merkin.

“We are disappointed that the Attorney General of the State of New York has filed this hasty and ill-conceived civil lawsuit, against which we intend to defend vigorously. From the outset of the Attorney General’s investigation, Mr. Merkin, Gabriel Capital Corporation, and the funds they manage have provided their full cooperation, answering all questions and producing hundreds of thousands of documents. The evidence shows that this lawsuit is without merit. Contrary to the Attorney General’s allegation, investors in the Ascot Funds were well aware that the money was being invested with Madoff. Furthermore, investors in all of the Funds expressly authorized Mr. Merkin to allocate assets to third party managers such as Madoff, without giving them notice or obtaining their consent. Mr. Merkin performed extensive due diligence on Madoff and his trading strategy, and in addition arranged meetings with Madoff for many investors to perform their own due diligence. Unfortunately, Mr. Merkin’s due diligence, just like the detailed investigations performed by countless others, including regulators, was thwarted by the intricate, fraudulent scheme perpetrated by Madoff.” [via WSJ]

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