There are signs that with Bernard Madoff convicted and jailed for orchestrating an estimated $65 billion Ponzi scheme, the attention is now shifting to the so-called “feeder funds” that supplied Madoff with much of the cash to keep his schemes going. On April 1, the Massachusetts secretary of state sued the Fairfield Greenwich Group. And now, Modern Orthodox scion J. Ezra Merkin is in the crosshairs.
New York Attorney General Andrew Cuomo is suing Merkin for funneling funds to Bernard Madoff’s Ponzi scheme allegedly without proper due diligence or the knowledge of his investors. Merkin is also being sued by real estate magnate and publisher Mort Zuckerman, who claims to have lost $40 million with Madoff via Merkin. (Full disclosure: The Forward Association, which owns this newspaper, lost approximately $355,000 through an indirect investment in one of Merkin’s funds.)
The suits will turn the spotlight back onto Merkin, a son German immigrant Hermann Merkin — Hermann founded and funded a number of major New York institutions, including Merkin Hall near Lincoln Center and the Fifth Avenue Synagogue — and brother of Daphne Merkin, a prominent writer. J. Ezra Merkin was on the board of a number of major Modern Orthodox institutions that lost money in the Madoff debacle, including Yeshiva University and the Ramaz day school.
The ongoing legal battles — and the colossal legal fees sure to follow — don’t bode well for Merkin’s world-class collection of paintings by modernist master Mark Rothko.