New York judge approves settlement over Madoff Ponzi scheme Jamie Davis at 8:14 AM ET
[JURIST] A New York judge on Friday approved a $410 million settlement agreement [press release] between hedge fund manager Ezra Merkin and the state of New York in a lawsuit connected with the Bernard Madoff Ponzi scheme [JURIST news archive]. New York state brought suit against Merkin in 2009, accusing him of directing funds into Madoff's Ponzi scheme and charging him with violations of the Martin Act, General Business Law § 352 and Executive Law § 63(12). The suit also accused Merkin of violating his fiduciary duty to funds he controlled. According to New York Attorney General Eric Schneiderman [official website], Merkin received hundreds of millions of dollars in management fees while his clients lost money to Madoff. The settlement plan requires Merkin to pay $405 million dollars to investors who lost money to the scheme and $5 million to the state of New York to cover costs. Schneiderman said:
I am proud to announce that we have recovered over $400 million for the investors and charities that were harmed by history's largest Ponzi scheme. This agreement is a victory for justice and accountability.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. By holding Mr. Merkin accountable, this settlement will help bring justice for the people and institutions that lost millions of dollars.
Under this agreement, aggrieved investors should be able to recover 40 percent of their lost money.
Courts have recently been cracking down on rogue financiers and their Ponzi schemes. Earlier this month federal prosecutors urged a judge [JURIST report] to give Allen Stanford the maximum sentence of 230 years in prison for his involvement in a $47 million Ponzi scheme. His would be the maximum sentence under federal sentencing guidelines and 90 more years than Madoff received in 2009. In March, Madoff trustee Irving Picard and the owners of the New York Mets reached a $162 million settlement [JURIST report] for victims of the Madoff Ponzi scheme, avoiding a trial in the US District Court for the Southern District of New York. Madoff was sentenced [JURIST report] in June 2009 to 150 years in prison for securities fraud stemming from his Ponzi scheme. He pleaded guilty [JURIST report] to 11 counts of securities fraud in March 2009.
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