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Madoff Investor Moves to Dismiss Damages Suit
New York Law Journal
July 08, 2009
Hedge fund operator J. Ezra Merkin has moved to dismiss a damages suit brought by the New York attorney general to recover an alleged $2.4 billion that was lost when he turned over his clients' money to Bernard L. Madoff to handle without telling the investors.
In the motion to dismiss, Merkin challenged the suit's assumption that he did not provide adequate disclosure that he was funneling the money to Madoff. The offering documents for the Ascot, Ariel and Gabriel funds, according to the motion, all advised investors the money could be invested with outside managers without their "notice" or "consent." Moreover, the motion contended that all of Merkin's clients were "sophisticated" investors who had placed at least $5 million in his funds.
In light of those disclosures, Merkin's motion contended, the state's complaint failed to "adequately allege" he had made any false statement, a key element of all six causes of action raised by the attorney general.
Madoff, who has pleaded guilty to a massive Ponzi scheme, was sentenced last week to 150 years in prison.
According to the attorney general, Merkin earned $470 million in fees for managing the three funds invested with Madoff.
For more coverage of the Bernard Madoff case, see the Law.com Madoff Watch page.
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