Saturday, 25 June 2016
Last updated 1 day ago
Jun 25 2012 | 2:06pm ET
Bernard Madoff feeder fund magnate J. Ezra Merkin has agreed to pay more than $400 million to compensate his investors for their losses in the $65 billion Ponzi scheme.
The deal, which was struck by New York Attorney General Eric Schneiderman and does not involve Madoff receiver Irving Picard, who is suing the former GMAC Financial chairman, will see $405 million sent to investors over a three-year period. Merkin clients could get more than 40% of their losses, with those who did not know Merkin was putting their money with Madoff getting more than those who did.
The deal was approved by a New York State judge on Friday and announced yesterday.
"By holding Mr. Merkin accountable, this settlement will help bring justice," Schneiderman said. "We have recovered over $400 million for the investors and charities that were harmed by history's largest Ponzi scheme." Some $5 million of Merkin's settlement will go to the state.
The settlement does not affect Picard's lawsuit, which seeks some $500 million in clawbacks, but resolves a New York civil fraud suit filed three years ago. Picard could challenge the settlement; his spokeswoman, Amanda Remus, said, "to the extent any third-party settlement seeks to divert funds, we will have to consider taking appropriate steps."
Merkin's clients lost some $1.2 billion when Madoff's scam collapsed at the end of 2008. Many of his investors where charitable organizations and schools.