Former GMAC Financial Services chairman Ezra Merkin is being sued by Andrew Cuomo, the New York Attorney General, for allegedly funnelling $2.4bn (£1.6bn) of his client’s funds into Bernard Madoff’s Ponzi scheme without their knowledge.
From the Daily Telegraph:
By James Quinn, Wall Street Correspondent
Former GMAC Financial Services chairman Ezra Merkin is being sued by Andrew Cuomo, the New York Attorney General, for allegedly funnelling $2.4bn (£1.6bn) of his client’s funds into Bernard Madoff’s Ponzi scheme without their knowledge.
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Mr Cuome accused Mr Merkin, whose Gabriel Capital managed several funds which fed money into Madoff’s melting pot, of civil fraud by allegedly secretly steering the money to the convicted fraudster without their knowledge.
In the lawsuit, filed in the New York State Supreme Court, Mr Cuomo alleges that investors, including a number of well-known Jewish charities including trusts belonging to property tycoon Mort Zuckerman, entrusted their investments with him and believed that they were safe.
Mr Merkin, who channelled money to Madoff through feeder funds including the Ascot fund and the Ariel fund, in return allegedly received $470m in management and incentive fees from the fraudster.
“Ezra Merkin betrayed hundreds of investors who entrusted him with their savings by recklessly feeding their funds into the largest Ponzi scheme in history, while claiming he actively managed their funds,” reads the opening page of the 55-page writ.
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