Hedge fund manager J. Ezra Merkin, who lost about $1.2 billion of his clients’ money to Bernard Madoff’s investment scam, has agreed to pay his clients $405 million in compensation.
New York Attorney General Eric Schneiderman announced the settlement Monday, which will provide an additional $5 million to the state.
Hundreds of investors, including the New York Law School, Harlem Children’s Zone, and the Metropolitan Council on Jewish Poverty, invested more than $2 billion in four funds controlled by Merkin in Madoff’s Ponzi scheme. More than 10 percent of the money Merkin invested was from charities and nonprofit organizations.
“This agreement is a victory for justice and accountability,” Schneiderman said in a statement. “Many New Yorkers entrusted their investments to Mr. Merkin, who then steered the money to Madoff while receiving millions of dollars in management and incentive fees.”
The court has appointed David Pitofsky and Bart Schwartz to oversee returning funds to the investors. Eligible investors can receive more than 40 percent of their cash losses. Investors unaware of Merkin’s part in the scheme will receive a defined percentage. Investors aware of Madoff’s role will receive a smaller percentage.
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