(Reuters) – Three hedge funds run by New York financier and philanthropist Ezra Merkin won dismissal of civil lawsuits accusing them of being part of swindler Bernard Madoff’s massive fraud.
In an order dated Friday and made public on Monday, U.S. District Judge Deborah Batts in Manhattan threw out 2008 lawsuits alleging fraud and misrepresentation by the Ascot Fund, the Gabriel Fund and the Ariel Fund. Another defendant was BDO Seidman LLP, the auditor of the Ascot Fund.
“No misrepresentation was made when defendants relied on Madoff, as a third-party manager, to follow the investment strategies that aligned with the stated investment strategies of the funds,” the judge’s order said.
Batts also said allegations that the funds should have recognized “red flags” alerting them to Madoff’s fraud “are unavailing given the opposing considerations of Madoff’s immense reputation and deep deception.”
Madoff, 73, was arrested in December 2008 and pleaded guilty in March 2009 to running a multibillion-dollar fraud over decades. He is serving a 150-year prison term.
In the wake of the Madoff scandal, Merkin, a money manager, philanthropist and art collector, resigned as non-executive chairman of GMAC LLC, the financing unit of General Motors. GMAC is now Ally Financial.
The plaintiffs in the lawsuit included New York Law School, a pension fund and two other investors. They invested a total of $18 million in Merkin’s hedge funds, money that was in turn invested in Madoff’s firm.
