Tuesday, May 19, 2009

Madoff Investor Merkin Approves Receiver for Funds

New York financier J. Ezra Merkin, sued earlier this month for $557.8 million by the trustee liquidating Bernard Madoff’s defunct money-management firm, agreed to the appointment of a receiver for two of his funds in a deal with New York Attorney General Andrew Cuomo.

Cuomo sued Merkin and his Gabriel Capital Corp. in April for secretly placing $2.4 billion of client funds with Madoff, who used the money in the largest Ponzi scheme ever. Merkin steered the assets to the money manager in exchange for $470 million in fees, Cuomo alleged.

Madoff, 71, pleaded guilty in March to defrauding investors of as much as $65 billion and faces as many as 150 years in prison at his sentencing in June.

“Merkin has agreed in principle to appoint Guidepost Partners LLC” as receiver, Merkin’s lawyer Andrew Levander said in a statement. Cuomo spokesman Alex Detrick didn’t return a call seeking comment.

Investors including prominent charities entrusted their funds to Merkin, who held himself out to be an “investing guru” when in reality he was “a master marketer,” Cuomo alleged in his complaint in New York State Supreme Court in Manhattan. Other Merkin entities included the Ascot Fund Ltd. and Gabriel, his management company.

Levander said in an interview that there is a hearing set for May 28 and that there is an agreement with Cuomo to “stabilize the funds.”

The case is New York v. Merkin, 09-450879, New York State Supreme Court (Manhattan.)