A former employee of hedge fund manager J Ezra Merkin claims Merkin was warned about Wall Street swindler Bernard Madoff years before losing tens of millions of dollars of investors' money in Madoff's Ponzi scheme, according to court papers.
New York University filed the documents as part of its lawsuit against Merkin and his Gabriel Capital fund, which gave Madoff $ 24 million of the school's endowment before the massive scheme collapsed and the money was lost. The court papers were filed in response to a lawsuit by the Fox Business Network cable news channel asking the documents be unsealed.
The documents unsealed by state Supreme Court Justice Richard Lowe include e-mails by Victor Teicher, a former financial analyst and convicted felon sometimes employed by Merkin in the 1990s. They also include Merkin's sworn depositions and letters from Merkin to investors telling them how well Gabriel Capital was doing.
The university's lawyers filed the papers in an effort to show that Merkin knew Madoff's apparent investment success was a sham and that he, too, is responsible for losses suffered by NYU and other investors.
Merkin and Gabriel also were sued by state Attorney General Andrew Cuomo, who accused them of investing $ 2.4 billion with Madoff without their investors' knowledge. Merkin got $ 470 million in fees for those investments.
