New York Daily News publisher Mortimer B. Zuckerman may move forward with a $40 million lawsuit against J. Ezra Merkin, a hedge fund operator who allegedly handed off millions of his clients’ funds to convicted swindler Bernard L. Madoff to invest, Manhattan Justice Richard B. Lowe ruled Friday.

Lowe sustained Zuckerman’s common law fraud claim, finding it alleges “misrepresentations of a present known fact — that Merkin had delegated complete control and investment discretion” of one of his hedge funds to Madoff.