… Yeshiva University, which did not respond to requests for comment, may… be at risk for clawbacks. The university’s initial investment of $14.5 million with Ezra Merkin’s Ascot Fund, which was invested indirectly with Madoff, had reached a purported value of $110 million by November 2008. The university has not responded to inquires about whether it withdrew an amount greater than its initial investment
… While both Yeshiva University and Hadassah have substantial endowments that far exceed any amount they could be asked to return by the Madoff trustee, neither would identify steps the organizations had taken to reassure donors that new donations would not be used to pay off future clawback requests…
Background here.
It’s Ezra Merkin’s father’s Oldsmobile.
Yeshiva’s got the same problem that the Fifth Avenue Synagogue had before it finally decided Merkin, object of more lawsuits than everyone in the world combined, couldn’t run the place (luckily, they were able to find Ira Rennert). Merkin’s father founded the synagogue; and, as for Yeshiva, Merkin senior was a major, major, benefactor. Even to this day, Yeshiva hasn’t been able to come up with the same we’re slightly disappointed rhetoric for Merkin that it’s used for its other ex-trustee, Bernard Madoff.
So pity the poor student journalist at Yeshiva University who tries to figure out what the fuck’s going on. UD admires Hannah Golden as she tries to get the ongoing story of the relationship between Ezra Merkin and her university. Let’s take a look.
J. Ezra Merkin continues to fight New York Attorney General Andrew Cuomo’s allegations that he deceived and defrauded investors out of $2.4 billion. According to court documents filed in April, Cuomo claims that Merkin hid his lack of involvement in the management of his company’s finances from his clients, including Yeshiva University. [Yeshiva wasn't only his client. Ezra Merkin was on Yeshiva's board of trustees, the most conflicted board of trustees UD's ever seen. Merkin was a trustee with a deep, historic connection to the university. Bernie Madoff, who helped run finances for Yeshiva, was his intimate. You tell me how much hiding from everyone at Yeshiva - the other trustees, for instance, some of whom had personal investments with Madoff/Merkin - there could have been.].
The lawsuit charges that Merkin passed himself off as a financial guru, while taking virtually no interest in his funds. Instead of supervising the investment funds as promised, he gave the controls to Bernard Madoff. Aside from bookkeeping and conversations with Madoff, Merkin had nothing to do with the funds once they were put into his trust.
“Merkin’s deceit, recklessness, and breaches of fiduciary duty have resulted in the loss,” alleges Cuomo’s suit. Despite his harsh words, Cuomo does not claim that Merkin was aware of Madoff’s Ponzi scheme; he claims merely stupidity. [Ouch. That's gotta hurt. But in fact Cuomo is claiming more than stupidity. Deceit, recklessness, etc. The reporter nowhere in the article, by the way, mentions the crucial fact that Madoff, while this was going on, was treasurer of Yeshiva's trustees and chair of the board of directors for its business school.]
Merkin resigned as a University trustee when the Ponzi scheme became public in December 2008. In an email dated December 16th, YU President Richard Joel announced that “Bernard Madoff is no longer associated with our institution in any way. The University had no investments directly with Madoff. Last Thursday night, we were informed by Ascot Partners, a vehicle in which we had invested a small part of our endowment funds for 15 years, that substantially all its assets are invested with Madoff. The Ascot fund was managed by J. Ezra Merkin who has served as a University trustee and chairman of the investment committee.” At that time, YU’s investment with Merkin was estimated at $110 million (about ten percent of YU’s endowment).
[Do you consider ten percent small?]
Merkin’s connection to YU began long before his trustee position; his father, Hermann Merkin, sponsored the Isaac Breuer College of Hebraic Studies in honor of his father-in-law in addition to other charitable donations.
“We don’t comment on legal matters,” wrote YU Chief Financial Officer Michael Gower to The Observer on August 24. “But I can say that we are unaware of any YU initiated lawsuits against Merkin and continue to await the outcome of the government’s efforts on behalf of investors such as YU.” [Weird locution, we're unaware. Gower's CFO. Any Yeshiva-initiated lawsuits are going to come from him. Does his left hand know what his right hand doeth?]
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UPDATE: There’s an even sexier Yeshiva/Madoff/Merkin story getting going, should journalists at YU be interested, and that’s the clawback thing:
Tasked by a federal judge with recovering as much of Madoff’s assets as possible, [the Madoff liquidation trustee] may seek to claw back funds from charities that reaped a net profit over the lifetime of their investments with Madoff…. he will seek to recoup funds from charities that profited from their association with Madoff or Madoff feeder funds. Such an action would not require proof that the investor acted improperly, or even had knowledge that there was anything amiss. The charities’ “profits” are instead understood to be nothing more than money Madoff took from other investors. In such cases, the investors can be forced to return the value of any withdrawals made during the previous six years, which is the statute of limitations in New York. There is little legal recourse.
… Bruce Bobbins, an external spokesperson for Yeshiva University, was unwilling to comment on whether YU had withdrawn more than the amount of its principal investment from its accounts with the Ascot Fund, a Madoff feeder fund. The Ascot Fund was run by Ezra Merkin, the chairman of the school’s investment committee. YU’s principal investment of $14.5 million had reached a purported value of $110 million by the time the scheme collapsed.
Uh-oh.
He’s lost all his Rothkos.
CityFile proposes we pitch in with replacements.
Last week, Ezra Merkin, the disgraced financier who funneled a couple of billion to Bernie Madoff and has since been slapped with civil fraud charges, agreed to give up his prized collection of art as part of a deal with the attorney general’s office.
Like you, we found the news deeply troubling. Can you imagine what it must be like to spend years buying up one priceless Rothko painting after another, only to have Andrew Cuomo come along and run off them? Not fun! As always, though, we’re here to help: We just sent a lovely Rothko poster to Merkin at his 740 Park Avenue duplex. Just because you aided and abetted the biggest crook in American history doesn’t mean you should have to stare at bare walls all day!
Sure, a poster hardly compares to the genuine article, but at $9.99—or $8.49 after you factor in the 15 percent discount we were offered as first-time buyers—the price is hard to beat. A single poster, however, isn’t going to be nearly enough to allow [us to] replace what Merkin’s lost. So if you, too, are in a giving mood today, you’re more than welcome to do your part to help out. Pick from one of the many posters here and send it to Merkin at the address below. (Just don’t send the same one we sent, obviously.)
Mr. J. Ezra Merkin
740 Park Avenue
Apt. 6/7B
New York, NY 10021
The Wall Street Journal reports:
CUOMO TO SELL MERKIN’S ART
New York Attorney General Andrew Cuomo is selling art owned by financier J. Ezra Merkin in an effort to repay his investors who lost millions in the Madoff fraud.
The sale of several Mark Rothko paintings and Alberto Giacometti sculptures belonging to Mr. Merkin and his wife will yield $191 million for investors.
Mr. Cuomo’s office arranged for the artwork to be sold to an anonymous buyer for $310 million…
gaaaaaah…i’m a
victim i tell you…
*************************
A few more details here.
While [Ezra] Merkin faces an intense legal onslaught, he also must cope with a thorny situation at the Fifth Avenue Synagogue, where he serves as president and where his father was a co-founder. According to The Jewish Week, Mr. Merkin is slated to become chairman [Replacing Ira Rennert! Way non-stringent admissions criteria.] on Wednesday.
Although the title is largely ceremonial in most congregations, the promotion has infuriated at least some members, with one calling it “the height of chutzpah” for Mr. Merkin to stick around.
Nobel Prize-winner Elie Wiesel is expected to be named an honorary chairman of the synagogue. Mr. Wiesel was virtually wiped out in the Madoff scam—and so was his famous foundation.
… but you have to admit this is good stuff. From Washington Square News, student newspaper of New York University:
J. Ezra Merkin allegedly lost $24 million of NYU’s money by investing with Bernard Madoff. Now, according to recently released court documents, he had been warned to steer clear of Madoff in the early ’90s by a former employee but ignored the advice.
Victor Teicher, who managed Merkin’s Ariel Fund Ltd., told Merkin that he found some of Madoff’s practices to be questionable.
… “He told me sometime — perhaps it was ’92 or ’93, that he was considering investing with Bernie Madoff,” Teicher said in the Feb. 9 deposition. “He described Madoff in terms of what he was doing and the consistency of the returns, and I felt that that was just not possible.”
But Merkin continued to invest with Madoff, who pleaded guilty to stealing $65 billion and now faces up to 150 years in prison when he is sentenced in June.
… “Ezra had positioned himself in the marketplace as someone who was very knowledge about investing and researching matters,” Teicher said. “People believed that that was his specialty.”
NYU lost $24 million when it invested with Merkin’s fund after the university had directly told him not to invest with Madoff.
… “He ultimately fooled himself in the sense that by positioning himself in the marketplace as someone who does a lot of research, he actually believed it,” Teicher said.
Teicher graduated from the Stern School of Business in 1976 with a master’s of business administration in finance. He was convicted for insider trading in 1990. [Nice succinct cv there. MBA → Insider trading... Okay.... MBA prepares you nicely for this sort of outcome, I guess, if you go by the numbers of degree recipients who, like Teicher ... Anyway. What UD really finds intriguing here are the dates of various events. Teicher says he advised Merkin against Madoff well after his conviction. So Merkin's getting advice about the Ponzi mastermind of the century from someone recently convicted of insider trading. Right? Or am I getting this wrong? If I'm right, Daphne Merkin needs to write another op-ed piece in the New York Times about how her brother was surrounded by criminals and had no place else to turn.]
After Madoff’s scheme fell apart, Teicher and Merkin had several e-mail and phone exchanges.
“You, however, took a brilliant career and actively, willingly, wiped your ass with it when it was obvious that you [knew what you] were doing,” Teicher said in his testimony.
UD’s favorite paper thought it’d be a great idea to have Ezra Merkin’s sister write about the Madoff/Merkin scandal, and his sister thought so too.
I mean, this would be fun all around: Daphne Merkin could use the paper’s editorial pages to try to exonerate her brother, the NYT could boast of its proximity to high-society banditry, and NYT readers could satisfy their obscene curiosity as to how the sister of one of the major financial malefactors of our time feels about her brother … Sort of like Shot in the Heart for rich people…
But now the paper’s public editor thinks maybe there were some problems in the plan:
Times readers who realized the connection protested that the newspaper had given Ezra Merkin’s sister a platform to make what they saw as a veiled defense of his conduct without coming clean about the depth of his involvement.
“Her column attempts to put some of the blame on the investors, but the people who invested with her brother knew nothing about Madoff,” said Jane Isay of Manhattan. “Daphne Merkin is a good writer, but readers might consider her ideas more analytically if they knew who her brother actually is, and what he has actually done.”
Daphne Merkin is a very good writer, able to mix it up quite splendidly. NYT readers as a result really need to be on their toes. The paper’s not going to help them.
*************************
Update: America’s most high-profile synagogue continues to be run by Merkin and Ira Rennert, a most godly pair.
… Art dealers should rejoice at the perfect storm on the horizon: cash-rich collectors desperate to invest devalued currency into artworks by the dead and aged, coming face-to-face with a slew of soon-to-be indicted moneybaggers, forced by either the law or necessity to sell their art collections. Like bookies in Vegas, these dealers need only match up both sides of the client equation and collect the vigorish.
What this means for the art market is simple: a steep drop in prices for the work of younger blue chip artists awash in inventory both present and future, and an expanding universe of price appreciation for the limited set of artworks created by those gone by…
UD thanks Roy Poses for alerting her to the civil fraud charges brought against Ezra Merkin today.
New York’s attorney general brought civil fraud charges against hedge fund manager Ezra Merkin on Monday, saying he duped investors by secretly steering $2.4 billion in client money into Bernard Madoff’s Ponzi fraud without their permission.
… New York Attorney General Andrew Cuomo said he ignored glaring red flags about Madoff’s investments in an effort to reap huge fees from clients.
Merkin and his Gabriel Capital Corp money management firm “betrayed hundreds of investors who entrusted him with their savings,” the lawsuit filed in New York State Supreme Court said.
… The lawsuit also said Merkin mixed his personal funds, including his management fees from his Ascot and Gabriel funds, with the funds of his management company. Cuomo contends Merkin used management firm funds for personal use, including buying more than $91 million in art for his apartment…
That last thing… the art thing. That’s mainly a huge number of huge Rothko paintings. World dealers are salivating.
… ass? Merkins aren’t made for that purpose.
Thus Ezra Merkin’s attempt to cover his ass in the Madoff matter by having his sister write a New York Times opinion piece minimizing his involvement was doomed to fail.
Yet the real question is how she managed to get the piece published at all. It’s rank conflict of interest, an attempt by a protective sister to twist the facts of her brother’s culpability.
Gawker and the Jewish Journal, among others, have expressed amazement at what looks to UD like simple corruption on the part of the NYT. Daphne Merkin’s a longtime contributor to the newspaper, no doubt a friend of some on the editorial board, and they’re doing a friend a favor by letting her try to influence the many lawsuits currently being filed against her brother.
It’s disillusioning for poor UD. She never thought of the New York Times as a provincial newspaper.
… that people have trouble grasping. Like —
Ezra Merkin was, well, wrong, to take tens of millions of dollars in fees for doing nothing. For handing money from clients to his friend Bernie. Simply put, this movement of clients’ money to the financial criminal of the century — which I guess involved a computer click or two — represented no effort or, uh, judgment at all.
Mr. Merkin was earning a lot of money for doing very little. According to a letter he sent clients on Dec. 11, Mr. Merkin delegated “substantially all” of Ascot’s $1.8 billion to Bernie Madoff. Roughly 25% of the assets in Mr. Merkin’s Ariel Fund Ltd. and Gabriel Capital LP were also meted out to Madoff. (Ariel Fund Ltd. has no connection to the Ariel mutual funds of Chicago.)
… Mr. Merkin still collected full fees on the assets he had given to Bernie Madoff. In Ascot alone, Mr. Merkin’s deferred fees (which he is now unlikely to receive) exceeded $320 million by the end of 2007.
Mr. Merkin also charged full freight as a philanthropist.
… As chairman of the investment committee at Yeshiva University, Mr. Merkin put about $15 million of the school’s endowment into Ascot. He thus captured a 1.5% annual fee for himself, even though Yeshiva could have given its money directly to Bernie Madoff — who was later treasurer of the university’s board — for nothing. Although Mr. Merkin was also a donor to Yeshiva, the arrangement strikes many as highly unusual….
“What was in his mind to charge that fee?” asks a financier familiar with the Yeshiva investment. ” How in the world could he justify that?”…
What a prince.
But he’s not the subject of this post. This post is about a university employee taking a lot of money for himself even though he shouldn’t. And doesn’t have to. Here’s a recent letter to the editor of the Seattle Times about it.
Deflate Holt’s salary
In light of the continuous reporting of economic woes, fraud, failures and the exhortations to do more with less, granting defensive coordinator and assistant Husky football coach Nick Holt a salary amounting to more than $2 million over three years seems particularly indifferent to the realities of our time ["UW football is 'a sleeping giant' and Holt plans to inject adrenaline," Steve Kelley, staff columnist, Jan. 7].
Coach Holt’s remarks suggesting that he’s in the business to “make a difference in these kid’s lives” ring hollow. He said, “It’s unfortunate that the really good professors don’t get paid as much [as coaches to].”
He claimed “it’s the world we live in” that’s to blame and he “can’t do anything about that.” Actually, he can.
Does he really want to inspire and teach? If so, then demonstrate that a football program is but one part of a distinguished university. Our University of Washington is composed of great teachers, learning facilities and research.
Holt should dedicate a portion of his inflated salary to faculty incentives, student-learning stipends and improvements to the University’s physical operations. Unlike the recently assembled reporters who, after listening to Holt, were described by Kelley as “ready to hit somebody,” I’d like to see a leader like Holt stand at the center stage he enjoys and inspire us all to help somebody.
We think we can do something about the world we live in. Let’s restore some balance to our priorities.
Holt’s strange defeatism reminds UD of one wildly overcompensated university president’s perennial defense of his salary. The board of trustees, he would always say, decided he should make that much. He simply couldn’t do anything about it. They insisted he take it. World we live in, you know.
J. Ezra Merkin, the New York financier tied to Bernard Madoff’s alleged $50 billion Ponzi scheme, is hearing from collectors interested in buying his dozen $150 million Mark Rothko paintings, the world’s largest private grouping, according to his art adviser.
Though the paintings aren’t for sale now, “everything has a price,” said Ben Heller, 83, who helped Merkin buy the abstract expressionist paintings during the past five years. …
… the Madoff thing’s getting positively Shakespearean.
Bard College, a liberal-arts school in New York State’s Hudson Valley, lost about $3 million in investments related to Bernard Madoff.
The losses involved $11 million of Bard’s $270 million endowment that the college invested in the Ariel Fund, managed by J. Ezra Merkin, Bard President Leon Botstein said today in a telephone interview from Jerusalem. Merkin was introduced to the school by the late Leon Levy, a Bard trustee who founded OppenheimerFunds Inc., and serves as a governor of Bard’s Levy Economics Institute, Botstein said. [Bit confusing there. If Levy's late, how can he serve?]
Bard believed about a fourth of its Ariel investment was in cash, Botstein said. Instead, it was invested with Madoff without the school’s knowledge, he said.
“It’s absolutely outrageous,” Botstein said. “We never knowingly invested with Madoff. We invested with Ezra Merkin.”…
