Financier and philanthropist J. Ezra Merkin assented Tuesday to step down as manager of his hedge funds and to place them into receivership.
The step was demanded by New York Attorney General Andrew Cuomo, who brought civil charges against Merkin last month, accusing him of fraudulent concealment and misrepresentation for steering his clients’ money to Bernard Madoff without their knowledge or permission.
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Merkin, the former chairman of GMAC and the scion of a prominent Jewish family, funneled $2.4 billion into Bernard Madoff Investment Securities, including millions from prominent institutions like Yeshiva University.
Some of his investors, including New York University, New York Law School and Mort Zuckerman’s charitable trust, have brought suit against him, as has the trustee liquidating Madoff’s firm.
The agreement, announced Tuesday in New York State Supreme Court, means that Merkin will no longer control his three hedge funds, Ascot, Gabriel and Ariel, from which he reportedly collected more than $470 million in fees over the last decade.
“Mr. Merkin is working closely with the New York Attorney General,” his attorney, Andrew Levander, said in a statement, adding that Merkin had agreed in principle to appoint Guidepost Partners as receivers for the funds while he remains available to consult regarding the wind-down.
Justice Richard Lowe gave Cuomo and Merkin until May 28 to finalize the agreement.
Despite his legal and financial woes, the Jewish Week reported that Merkin is the frontrunner expected to be elected chairman Wednesday of the tony Fifth Avenue Synagogue, which his father helped found.
Nobel Laureate Elie Wiesel, who lost most of the funds of his humanitarian foundation, as well as his personal savings, after investing with Madoff, will become one of two honorary chairmen.
Despite consternation in some quarters, the Jewish Week said that Merkin has not been publicly opposed, perhaps because he has been one of the synagogue’s primary benefactors.
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