Cuomo files criminal charges against fraudulent investor in Madoff case

By Keith Loria | Apr 6, 2009

Andrew Cuomo (D)

NEW YORK (Legal Newsline) -New York Attorney General Andrew Cuomo filed charges Monday against an associate of Bernard Madoff for his role in steering $2.4 billion in investor assets in the infamous Ponzi scheme.

A 54-page complaint filed in New York State Supreme Court by Cuomo, alleges that investors, including several prominent charities and non-profits, entrusted their investments to J. Ezra Merkin, who then steered the money to Madoff without their permission, in exchange for $470 million in management and incentive fees.

This is in direct violation of New York's Martin Act, since Merkin was concealing from his clients the investment of more than $2.4 billion with Madoff.

"Merkin profited enormously from Madoff's scheme, reaping huge commissions while investors lost all their money," Cuomo said. "Merkin duped individual investors, non-profits, and charities into believing he was responsibly managing their investments, when in actuality he was dumping them into history's largest Ponzi scheme."

The complaint charges that Merkin was not the "investing guru" he claimed to be but instead just a "master marketer."

The Democratic AG further said he believes that Merkin targeted New York charities and non-profits, pocketing hundreds of millions of dollars from his investors and the lawsuit seeks payment of damages and disgorgement of all fees by Merkin.

He also charges Merkin's management company, Gabriel Capital Corporation. Merkin managed several funds, including Ascot Fund Limited, Gabriel Capital L.P., and Ariel Fund.

The complaint further alleges that Merkin ignored irregularities and other glaring red flags related to Madoff's investments. As a result, hundreds of investors lost millions in investments, tragically including important charity organizations that were specifically targeted by Merkin.

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