Friday, 12 February 2016
Last updated 2 hours ago
Dec 17 2008 | 1:49am ET
A law school that apparently lost $3 million in the Bernard Madoff scandal has sued one of the hedge funds that invested all of its assets with the disgraced Wall Street legend.
The New York Law School yesterday filed suit against Ascot Partners, one of the feeder funds to the Madoff firm, accusing it of being reckless or negligent with its money. The suit, which seeks class-action status, accuses Ascot, general partner J. Ezra Merkin and auditor BDO Seidman of “recklessly or with gross negligence caused and permitted $1.8 billion, virtually the entire investment capital of Ascot” to be invested with Madoff, who has been charged with running a $50 billion Ponzi scheme.
Merkin is also the chairman of GMAC Financial Services.
“As a proximate result of Merkin's bad faith breach of fiduciary duty, plaintiff and other class members have sustained damages, suffered mental and emotional distress and have lost most, if not all, of their respective investments in an amount yet to be determined,” the lawsuit, filed in Manhattan federal court yesterday, said.
Another New York school, Yeshiva University, also invested with Ascot. Merkin served on the school’s board of directors; Yeshiva is thought to have lost as much as $140 million. And New York Daily News owner Mort Zuckerman, whose charitable foundation may have lost $30 million invested in Ascot, told the Financial Times he also plans to sue Merkin.
“I will be taking legal action at some point against the person who led the chief portion of the fund,” Zuckerman said, adding that Ascot’s placing all of its assets with Madoff “was inconsistent with the agreements we had.”
For his part, Merkin is claiming that he was duped by Madoff.
“Mr. Merkin and his family are personally among the largest victims of the massive fraud confessed by Bernard Madoff,” said Andrew Levander, Merkin’s lawyer. "Like the other victims and the entire financial community, Mr. Merkin is shocked by these events. He intends to defend the lawsuit vigorously while seeking redress for himself and his investors from whoever perpetrated this fraud.”
BDO Seidman, the auditor, also denied any wrongdoing.
The other Madoff-related lawsuit known to have already been filed is against Madoff himself. The lead attorney in that case told Newsday that his firm has interviewed “upwards of 100 individuals” since filing the suit, which also seeks class-action status, on Friday. And the calls are “not tapering off,” Mark Mullholland of the Long Island law firm Ruskin Moscou Faltischek said.
Meanwhile, literally dozens of other law firms are promising class-action suits.