The trustee in the Bernard Madoff Ponzi scheme case yesterday asked a federal judge to block New York State's $410 million settlement with Madoff feeder fund manager J. Ezra Merkin.
Irving Picard warned that the deal, brokered by New York State Attorney General Eric Schneiderman, could imperil his efforts to maximize and fairly distribute money to Madoff's victims.
"If other attorneys general around the country could simply walk into state courts and secure settlements as the NYAG did, the BLMIS estate would be decimated, with residents of various states favored," Picard said in court yesterday.
"Put simply, the State of New York should not be permitted to wreak havoc on that long standing federal mandate by using New York State law to give its citizens and perhaps others in a select group a jump-start over all of the victims of this heinous fraud."
A spokeswoman for Schneiderman dismissed Picard's actions as "inappropriate and without legal merit."
"Merkin's money is not limitless, and with the prospect of over $400 million depleted through the settlement, the trustee is concerned that little or nothing will be left for BLMIS customers," Picard said. He is seeking $500 million from Merkin.