12/11/10

WSJ: Two Years Later and J. Ezra Merkin is mired in litigation

Two years after the discovery of the historic Madoff ponzi scandal, the WSJ does a where-are-they-now summary of some key players, "Life After Madoff's 'Big Lie'": Ruth, Peter and Shana Madoff, Mark and Andrew Madoff, J. Ezra Merkin, Maurice "Sonny" Cohn, his daughter, Marcia Cohn, and their firm, Cohmad Securities Corp., investigator Harry Markopolos, and victims Howard Siegel and Harry Pech.

We've followed J. Ezra Merkin in particular. Here is what the WSJ says about that man:
J. Ezra Merkin—art collector, former chairman of GMAC and the financier behind funds that funneled over $2 billion of charities' and other investors' money into the Madoff scheme—is mired in litigation.

Civil suits brought by the New York Attorney General and investors in his funds allege that he placed the bulk of the funds' money with the Madoff firm without investors' knowledge.

This week, in the attorney general's case, Mr. Merkin's lawyer filed reams of documents and correspondence between Mr. Merkin and his clients in an attempt to show that some knew his funds were largely "feeders" to Madoff. Mr. Merkin is also engaged in settlement discussions with the attorney general, said a person familiar with the matter.

"This has been a horrendous two years for Mr. Merkin and his family," said Mr. Merkin's attorney Andrew Levander. "He continues to do what he can to maximize the remaining assets for his investors and hopes someday to put this all behind him."

Mr. Merkin still lives at his duplex at 740 Park Avenue—the storied Manhattan apartment building that was the girlhood home of Jacqueline Kennedy Onassis and has boasted high-profile residents such as ex-Merrill Lynch chief executive John Thain and designer Vera Wang.

Last summer, he sold his massive collection of Mark Rothko paintings and Alberto Giacometti sculptures for $330 million, money that may help pay back investors, depending on the outcome of litigation. Authorities secured a freeze on Mr. Merkin's assets, including those funds, last year.

Mr. Merkin is no longer the president of the elite Fifth Avenue Synagogue on New York's Upper East Side. Members of his Jewish community still value his input on philosophical questions, said people who know him.

He's also been spotted dining out for lunch at the famed eatery Michael's with hedge fund manager Bill Ackman, and he attended financier and philanthropist Michael Steinhardt's 70th birthday party last Saturday at the Four Seasons restaurant. Mr. Steinhardt, who lost about $2 million through his investment in one of Mr. Merkin's funds, said he sees Mr. Merkin about once a month.

"He feels great remorse in a lot of ways," said Mr. Steinhardt. "Whatever happens in the future, this will be a permanent scar and there is very little he can do about that."

— Liz Rappaport

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