Tuesday, 25 October 2016
Last updated 7 hours ago
Dec 29 2008 | 3:26am ET
The holiday season has not been very festive for J. Ezra Merkin, the GMAC Financial chairman whose hedge fund lost billions in Bernard Madoff’s alleged $50 billion Ponzi scheme. Merkin got a very unwelcome early Christmas present from New York University, which sued him, his Gabriel Capital and his Ariel Fund hedge funds on Christmas Eve.
NYU, the largest private university in the U.S., said it lost $24 million due to Merkin’s investments with Madoff. The school accused Merkin of investing with Madoff without notifying investors and of due diligence failures.
When Merkin suggested investing some of NYU’s assets with Madoff, “he as explicitly told this was not a proper investment vehicle,” NYU alleged in a statement. The school said it had $94 million invested in Ariel.
NYU’s complaint, the second filed by a New York City university against a Madoff investor, was filed in New York state court in Manhattan.
Madoff was arrested on Dec. 11 and charged with securities fraud in what could be the largest-ever Ponzi scheme.