NY AG Says Madoff Trustee Shouldn’t Be Able to Block $410M Settlement with Money Manager Merkin

New York Attorney General Eric Schneiderman doesn’t believe that Madoff Trustee Irving Picard should be allowed to block the $410 million securities settlement reached between the state and J. Ezra Merkin, the former GMAC Financial Services chairman who was the money manager of funds that acted as the “feeders” to the Ponzi mastermind. Picard wants the settlement stayed.

Schneiderman had filed a New York securities case against Merckin in 2009 to recover some of the money lost in the multibillion dollar Bernard Madoff Ponzi scam that went on for decades. Picard, however, contends that he is the only one entitled to seek recovery for the victims of the scheme. He also says it is his job to thwart attempts to take assets owned by the bankruptcy estate. He has argued that with the Merckin deal Schneiderman is trying to get around bankruptcy law. As of August 2012, he had raised approximately $9 billion for Madoff’s former clients, who lost about $17 billion of their capital when the Ponzi scam collapsed.

Now, Schneiderman and Bart Schwartz, who is the receiver for Merkins’ funds, are asking a federal district court to stop Picard’s motion seeking injunction to block the settlement. They say that Picard has known for some time that this case was seeking resolution but that he had previously made no attempt to stay their efforts. They pointed out that there are investors depending on this settlement to get their lost funds back.

Madoff is serving a 150-year sentence behind federal prison bars. Ironically enough the man known for making sham investments apparently made at least one investment that is now paying off. His reported $2.2 million investment in Stemline Therapeutics is now valued at $5.5 million after the biotechnology company recently went public.

Madoff makes millions on a real investment, MSN, February 4, 2013
Madoff Trustee Sues New York to Stop Merkin Settlement, Bloomberg, August 1, 2012

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$750,000 Arbitration Award Against Stone & Youngberg LLC Confirmed by District Court, Stockbroker Fraud Blog, June 30, 2011

Federal Records Act Lawsuit Seeking to Make the SEC Reconstruct About 9,000 Enforcement-Related Documents is Dismissed, Institutional Investor Securities Blog, February 5, 2013