Look out J. Ezra Merkin: Your sister might be willing to give you a free pass, but the New York attorney general isn’t. This morning Andrew Cuomo sued the disgraced investor for the uber-rich, a man who is accused of being one of Bernard Madoff’s primary fund feeders.
Here’s the story from The New York Times:
The lawsuit, filed under state charity and securities laws, claims that Mr. Merkin improperly collected more than $470 million in fees from his clients, who included more than a dozen nonprofit organizations, by “falsely claiming he actively managed their funds” when in fact he simply handed their money over to Mr. Madoff, without adequate investigation or oversight.
The complaint charged that Mr. Merkin had failed to carry out the diligent research and investigation he had promised, and in some cases had deliberately deceived clients about investing with Mr. Madoff.
“Merkin’s deceit, recklessness, and breaches of fiduciary duty have resulted in the loss of approximately $2.4 billion,” according to the complaint filed by Mr. Cuomo’s office, which opened an investigation of Mr. Merkin soon after the Madoff scheme collapsed in mid-December.
The accusations echo charges that have already been made against Mr. Merkin in private lawsuits filed by some affected charities and institutions, which include the New York University Law School and a charitable foundation established by Mortimer B. Zuckerman, the publisher and real estate executive.
A lawyer for Mr. Merkin, Andrew J. Levander, could not immediately be reached for comment, but he has said in the past that his client will “fully cooperate with any investigation by the New York attorney general’s office.”