A Reuters news report said the lawsuit is the latest against Merkin and other funds in recent days as investors seek to recover losses related to the scheme, which authorities charged was run by Madoff. NYU filed the suit earlier this week in New York State Supreme Court.
Merkin, who is chairman of GMAC LLC, is named as a defendant, along with his Gabriel Capital LP fund and Ariel Fund Ltd. GMAC is the finance business owned by General Motors Corp and private equity firm Cerberus Capital Management LP.
“The Funds ‘feeding’ money to Madoff, including Ariel, made a conscious effort to conceal Madoff’s involvement from their own investors,” the NYU lawsuit said, according to Reuters. “This concealment was a requirement dictated by Madoff, which was agreed to by Merkin and other ‘feeder’ funds.”
Merkin was sued last week in U.S. District Court in Manhattan for his management of Ascot Partners LLP, a fund he founded that lost an estimated $1.8 billion from investing money with Madoff, Reuters said.
Madoff, a 70-year-old investment adviser and former chairman of the NASDAQ stock market, was arrested on December 11 and charged with securities fraud. Authorities said Madoff confessed to running a $50-billion Ponzi scheme in which early investors were paid off with the money from new clients. He is under house arrest in his Manhattan apartment on $10 million bail.
The latest suit is New York University v. Ariel Fund Ltd 08- 08603803 in New York State Supreme Court in Manhattan.
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