J. Ezra Merkin

Merkin is the son of prominent businessman Hermann Merkin and Ursula Merkin (née Ursula Sara Breuer), both German-born Orthodox Jews who fled Germany prior to World War II to escape Nazism. Merkin's sister is Daphne Merkin, a writer. He and his wife, Lauren, have four children.

On May 20, 2009, he resigned as President of Fifth Avenue Synagogue, which was founded by his father in 1959. Members include some of his largest Madoff-related investors, losing in total, more than $1 billion.{{cite news| url=https://www.nytimes.com/2009/05/22/nyregion/22merkin.html?ref=business | work=The New York Times | title=Financier in Madoff Case Quits Synagogue Position | first=Paul | last=Vitello | date=May 22, 2009 | accessdate=May 5, 2010}}

Merkin attended Ramaz, an Upper East Side Modern Orthodox prep school, Yeshivat Kerem B'Yavneh and Yeshivat Har Etzion yeshivas in Israel, then Columbia University and Harvard Law School.

In 1995, he paid $11 million for an 18-room duplex formerly owned by Ron Perelman, a member of his synagogue, at 740 Park Avenue, sometimes referred to as "the world's richest apartment Building."{{cite web|url=http://www.mgross.com/books/740-park/|title=740 Park|work=mgross.com}} In 2003, he began to collect 12 Mark Rothko paintings, the largest private collection in the world, worth an estimated $150 million.{{cite web|last=Pollock |first=Lindsay |url=https://www.bloomberg.com/apps/news?pid=20601088&refer=muse&sid=aYqFPM0RWUsA |title=Merkin's Art Adviser Bought Expensive Rothkos, Lost Millions |publisher=Bloomberg |date=January 8, 2009 |accessdate=10 November 2015}} The Rothkos were sold in 2008, under an agreement with the receiver, for $320 million.

Merkin also owns a home in Atlantic Beach, New York, valued at $1.7 million, and a property in Eagle County, Colorado, worth $506,000.{{cite news| url=https://www.bloomberg.com/apps/news?pid=20601103&sid=aYQaNaSbUS2Q&refer=us | work=Bloomberg | title=Merkin Intimidated Co-Op Board While Building Funds Madoff Lost | date=January 9, 2009}}

"It's very, very difficult for Ezra to make decisions. He worried about the big picture, fretted over allocations. His gift was that he was a world-class salesman. He recognized that many people didn't have (investment decision) confidence, that if people had confidence in him, then he could give them confidence," said one money manager who worked with him over the years.

From 1979 to 1982, he worked for the law firm Milbank Tweed. He worked at Halcyon Investments from 1982 to 1985. He moved on to Halcyon, a hedge fund run by Alan B. Slifka, his father's friend. There he met Joel Greenblatt, who founded Gotham Capital in 1985, where Merkin worked until 1988, as an analyst and a managing partner in Gotham Capital LP and Ariel Capital LP.

In 1988, he started Gabriel Capital to raise capital, and funnel it to managers in exchange for a fee. By 1992, Merkin was raising money and co-managing securities with and for Stephen A. Feinberg, a manager whose private-equity firm Cerberus Capital Management, later bought controlling shares in Chrysler (80%) and GMAC (51%, at a cost of $6.4 billion),{{cite news| url=https://www.reuters.com/article/americasPrivateEquityNews/idUSTRE4BT5K120081230 | work=Reuters | title=GMAC bailout could give Cerberus a floor and exit | date=December 30, 2008}} the financing arm of General Motors.{{cite web|url=http://www.muckety.com/J-Ezra-Merkin/22527.muckety|title=J. Ezra Merkin at Muckety|accessdate=February 15, 2009|archive-date=February 15, 2009|archive-url=https://web.archive.org/web/20090215211033/http://www.muckety.com/J-Ezra-Merkin/22527.muckety|url-status=dead}} Merkin invested his funds into Cerberus and its portfolio companies. His Gabriel fund invested $79 million in Chrysler, $66 million in GMAC, and $67 million in Cerberus partnerships, according to year-end statements.{{cite news| url=https://www.nytimes.com/2009/01/16/business/16madoff.html | work=The New York Times | title=Inquiry Started of Financier Who Invested With Madoff | first=Leslie | last=Wayne | date=January 16, 2009 | accessdate=May 5, 2010}} Although Cerberus lost its controlling stake in Chrysler, ultimately, investors in Chrysler and GMC received more than their investment back in proceeds.

{{cite web|url=http://www.foxbusiness.com:80/story/markets/industries/transportation/cerberus-lose-stake-chrysler-auto-unit-wsj/ |publisher=Fox Business Network |title=Cerberus To Lose Stake in Chrysler Auto Unit: WSJ |access-date=March 31, 2009 |url-status=dead |archive-url=https://web.archive.org/web/20090402151024/http://www.foxbusiness.com/story/markets/industries/transportation/cerberus-lose-stake-chrysler-auto-unit-wsj/ |archive-date=April 2, 2009 }}

In 2005, Cerberus and Gabriel bought a 9.9% combined interest in Bank Leumi, but in April 2009, decided to sell to boost liquidity due to their substantial financial losses in 2008.{{cite news| url=https://www.reuters.com/article/GCA-CreditCrisis/idUSTRE53I0FE20090419 | work=Reuters | title=Cerberus, Gabriel to sell stake in Bank Leumi: source | date=April 19, 2009}}

Merkin managed Ascot Partners LP, a hedge fund which was valued at $1.8 billion prior to the collapse of Bernard L. Madoff Investment Securities LLC.{{cite web|url=https://www.bloomberg.com/apps/news?pid%3D20601087%26sid%3DagRBW.Zq5PW8%26refer%3Dhome |title=Last Updated |website=Bloomberg News |access-date=7 March 2017 |url-status=dead |archive-url=https://web.archive.org/web/20100613163056/http://www.bloomberg.com/apps/news?pid=20601087 |archive-date=June 13, 2010 }}

In 2006, Cerberus appointed Merkin as nonexecutive Chairman of GMAC, a large investment for Cerberus.{{cite news|url=https://www.nytimes.com/2009/01/16/business/16madoff.html?ref=business |title=Inquiry Started of Financier Who Invested With Madoff|newspaper=The New York Times|date=January 16, 2009|accessdate=10 November 2015}} This investment was nearly a washout, but ultimately Cerberus investors recouped their capital. However, in January 2009, Merkin had to resign from his chairmanship as a condition of the U.S. Federal Reserve granting GMAC bank holding company status, so it could obtain access to bailout money.

{{cite news| url=http://dealbook.blogs.nytimes.com/2009/01/07/ny-judge-restrains-merkin-funds-in-madoff-lawsuit/ | work=The New York Times | title=Judge Restrains Merkin Funds in Madoff Suit | date=January 7, 2009 | accessdate=May 5, 2010}}

Victor Teicher specialized in merger-related investments. In 1988 he was indicted for insider trading, convicted in 1990, and in 1994 jailed for a year.

In August 1998, Merkin again hired Teicher to manage about $1 billion as an independent operator, paying him $1 million a year plus incentives.{{cite news| url=http://www.nydailynews.com/money/2009/04/06/2009-04-06_in_bernie_madoff_investigation_financial.html | location=New York | work=Daily News | title=In Bernie Madoff investigation, financial adviser dodges questions | first1=Douglas | last1=Feiden | first2=Greg B. | last2=Smith | date=April 6, 2009}} In 1988 Merkin began putting a substantial portion of the money he raised for Gabriel Capital with Teicher. From 1988 to 1998, Teicher actually managed Merkin's off-shore, Ariel fund and Gabriel Capital.

Merkin "occupied himself primarily with raising money for the funds using his extensive social and professional network."

{{cite news| url=https://www.nytimes.com/2009/04/07/business/07madoff.html| work=The New York Times | title=Cuomo Sues Over Madoff Investments | first=Diana B. | last=Henriques | date=April 7, 2009 | accessdate=May 5, 2010}}

While in jail, Teicher was running about $375 million from Merkin's investors. In January 1995, Merkin took over Teicher's staff, put Gabriel Capital's name on the door, and hired Nathan Leight to manage the money.

Teicher had told Merkin not to invest with Madoff because such steady returns were impossible.

{{cite news| url=https://www.wsj.com/articles/SB123903070566093099 | work=The Wall Street Journal | title=Financier Charged in Madoff Fraud | date=April 7, 2009 | first=Liz | last=Rappaport}} After Madoff's arrest, Teicher immediately sent some emails to Merkin:

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.{{cite web|url=http://www.nyunews.com:80/news/city-state/madoff-investor-was-warned-by-nyu-alumnus-1.1723015 |work=Washington Square News |title=Madoff investor was warned by NYU alumnus |access-date=April 20, 2009 |url-status=dead |archive-url=https://web.archive.org/web/20090623222800/http://www.nyunews.com/news/city-state/madoff-investor-was-warned-by-nyu-alumnus-1.1723015 |archive-date=June 23, 2009 }}

The Madoff news is hilarious;hope you negotiate out of this mess as well as possible....Unfortunately, you've paid a big price for a lesson on the cost of being greedy.{{cite news | url=http://documents.nytimes.com/andrew-cuomo-civil-suit-ezra-merkin-gabriel-capital/page/670#p=673 | work=The New York Times | title=New York's Complaint Against J. Ezra Merkin | accessdate=May 5, 2010 }}{{Dead link|date=January 2020 |bot=InternetArchiveBot |fix-attempted=yes }}

I guess you did such a good job in fooling a lot of people, you ultimately fooled yourself...a man's name tells you who he is; Madoff made off with the money.{{cite news | url=http://documents.nytimes.com/andrew-cuomo-civil-suit-ezra-merkin-gabriel-capital/page/670#p=671 | work=The New York Times | title=New York's Complaint Against J. Ezra Merkin | accessdate=May 5, 2010 }}{{Dead link|date=January 2020 |bot=InternetArchiveBot |fix-attempted=yes }}

Ultimately, Merkin's investments with Madoff were extraordinarily costly for his investors and for him personally – both in dollars and in terms of reputation.

Merkin's funds had been longtime investors in Madoff. Starting in 1992, Merkin began investing some of the funds under his management into Madoff, collecting an annual fee of 1 – 1.5% of the funds' total assets. By 2005, Merkin earned about $35 million a year simply for funneling money to Madoff. Merkin invested personally and through family trusts and foundations $7 million in Ascot in its first six years, and less than $2 million over the following 10 years. He did not reinvest his $169 million in management fees for the years 1995 to 2007 back into his Ascot Partners, although he had more than $100 million in personal capital invested through his funds in Madoff.

Merkin was charged with fraud with connection with the Madoff investments. Ultimately, he prevailed in the fraud cases and no court ruled that he had any actual knowledge of the Madoff fraud.{{cite web|url=http://www.ft.com:80/cms/s/0/51a152ac-e31e-11dd-a5cf-0000779fd2ac.html |access-date=January 16, 2009 |url-status=dead |title=Merkin funds subpoenaed in Madoff case |work=Financial Times |archive-url=https://web.archive.org/web/20090324003454/http://www.ft.com/cms/s/0/51a152ac-e31e-11dd-a5cf-0000779fd2ac.html |archive-date=March 24, 2009 }}{{cite web|url=https://online.wsj.com/public/resources/documents/Merkin.exhibitsone0407.pdf |title=Exhibit 1 |work=The Wall Street Journal |accessdate=10 November 2015}}{{cite news |work=Reuters |url=https://www.reuters.com/article/businessNews/idUSTRE53548420090406 |author=Graybow, Martha |date=April 6, 2009 |title=Merkin charged with civil fraud in Madoff case}}{{cite web|url=https://online.wsj.com/public/resources/documents/Merkinexhibitstwo0407.pdf |title=Exhibit 21 |work=The Wall Street Journal |accessdate=10 November 2015}}{{cite web|url=https://online.wsj.com/public/resources/documents/Merkinexhibits30407.pdf |title=Exhibit 27 |work=The Wall Street Journal |accessdate=10 November 2015}} Although ultimately, this case was settled without a finding of fraud by Merkin, Merkin agreed to return any fees which he earned over the years associated with investments in Madoff's fund.

Merkin was hit with a series of lawsuits from disgruntled investors to recover funds lost in the Madoff scandal, but in most of these cases Merkin prevailed.{{cite news|url=https://money.cnn.com/news/newsfeeds/articles/djf500/200812162136DOWJONESDJONLINE000783_FORTUNE5.htm|title=Merkin, Ascot Fund Sued Over Madoff Investments|date=December 18, 2008|publisher=CNN}} {{Dead link|date=August 2010|bot=RjwilmsiBot}} Merkin had been sued for his role in running a "feeder fund" for Madoff.{{cite news |first =Chad | last =Bray |url=https://money.cnn.com/news/newsfeeds/articles/djf500/200812162136DOWJONESDJONLINE000783_FORTUNE5.htm |title=3rd UPDATE: Merkin, Ascot Fund Sued Over Madoff Investments|date=December 16, 2008|publisher =CNN|agency=Dow Jones Newswires |accessdate=December 23, 2008 }} {{Dead link|date=August 2010|bot=RjwilmsiBot}}{{cite news|title=Imprisoned Felon Was Adviser to Madoff Investor|first=Leslie|last=Wayne|author2=Zachery Kouwe|url=https://www.nytimes.com/2009/02/14/business/14merkin.html|date=February 13, 2009|accessdate=February 14, 2009 | work=The New York Times}}

{{cite web|url=http://www.foxbusiness.com/story/markets/industries/finance/merkin-accused-court-letting-madoff-defraud-nyu/ |title=Merkin Accused Court Letting Madoff Defraud NYU|website=Fox Business |accessdate=February 19, 2009 }}{{dead link|date=May 2016|bot=medic}}{{cbignore|bot=medic}}{{cite news| url=http://uk.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUKN1735785820090217?sp=true | archive-url=https://archive.today/20120721015147/http://uk.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUKN1735785820090217?sp=true | url-status=dead | archive-date=July 21, 2012 | work=Reuters | title=Merkin showed deliberate ignorance-NY suit lawyer | first=Grant | last=McCool | date=February 17, 2009}}

Merkin lost three arbitration cases related to the Madoff investments. The cases included findings of negligence by Merkin but not fraud.{{cite magazine | title= Merkin Investor Awarded $1.8 Million in Madoff Case (Update3)| url=http://www.businessweek.com/news/2010-05-17/merkin-investor-awarded-1-8-million-in-madoff-case-update1-.html |date=May 17, 2010|

author=Freifeld, Karen | magazine=Bloomberg Businessweek | accessdate= May 23, 2010}}{{dead link|date=April 2023|bot=medic}}{{cbignore|bot=medic}}{{cite web|url=https://blogs.wsj.com/law/2011/10/25/merkin-head-of-madoff-feeder-fund-hit-with-7m-ruling/ |title=Merkin, Head of Madoff Feeder Fund, Hit With $7M Ruling|website=The Wall Street Journal|publisher=Wall Street Journal|accessdate=September 2, 2016|date=October 25, 2011}}

On May 7, 2009, Madoff Bankruptcy Trustee, Irving Picard filed a lawsuit

{{cite web|url=http://graphics8.nytimes.com/packages/pdf/business/0507madoff_Complaint.pdf |title=Bernard L. Madoff Investment Securities LLC (Debtor); Irving H. Picard (Plaintiff) v. J. Ezra Merkin et al |work=The New York Times |accessdate=10 November 2015}} against Merkin seeking to recover almost $500 million withdrawn from Madoff accounts in the last six years. The complaint alleged that since 1995, Merkin steered more than $1.0 billion to Madoff through three private hedge funds, Ascot Partners, Ariel Fund, and Gabriel Capital. Since 2002, the funds withdrew at least $494 million from Madoff – returns that Merkin "knew or should have known" were fraudulent. There were at least 500 instances in the last 10 years when his Madoff account statements showed large blocks of stock bought or sold at prices that did not match the stock's trading range for the day when the transactions supposedly occurred.{{cite news| url=https://www.nytimes.com/2009/05/08/business/08madoff.html?ref=business | work=The New York Times | title=Trustee Sues Madoff Hedge Fund Investor | first=Diana B. | last=Henriques | date=May 8, 2009 | accessdate=May 5, 2010}} Merkin was not shown to have had actual knowledge of any wrongdoing and won this case.{{cite web|title=Merkin, Head of Madoff Feeder Fund, Hit With $7M Ruling |url=http://www.nysb.uscourts.gov/sites/default/files/opinions/180117_246_opinion.pdf|website=US Southern District Bankruptcy Court|accessdate=September 1, 2016}}

As of May 18, 2009, Merkin's control of Ascot, Gabriel and Ariel hedge funds were placed into receivership for liquidation by Guidepost Partners. One receiver was responsible for managing the remaining money, nearly $1 billion, in the Gabriel and Ariel funds, and another was responsible for overseeing Ascot, whose entire $1.8 billion in assets was lost to Madoff's Ponzi scheme. New York University was given until the end of May 2009 to review the agreement.{{cite news| url=https://www.wsj.com/articles/SB124274106281334617 | work=The Wall Street Journal | title=Merkin to Put Funds in Receivership | date=May 20, 2009 | first=Liz | last=Rappaport}} Merkin collected over $470 million for managing three funds, Ariel, Gabriel and Ascot Partners, over the last decade, of which he paid back $405 million to investors after finding out about the Madoff scheme. The three funds had about $1.4 billion in assets remaining in 2009 with about $700 million in Ariel.[https://dealbook.nytimes.com/2009/06/30/merkins-art-sale-paves-the-way-for-settlement-with-cuomo/ Merkins art sale]

On June 22, 2012, Merkin agreed to pay back $405 million to investors in his hedge funds without any finding of fraud on his part.{{cite news| url=https://www.nytimes.com/2012/06/25/business/hedge-fund-manager-merkin-to-pay-405-million-in-madoff-settlement.html| work=The New York Times | first=Diana B. | last=Henriques | title=Hedge Fund Manager Merkin to Pay $405 Million in Madoff Settlement | date=June 24, 2012}} Picard, however, sued in bankruptcy court to stop the settlement, saying it obstructed his own effort to obtain $500 million from Merkin and his funds for other investors. Ultimately, Picard's suit to stop the settlement was unsuccessful.{{cite news| url=https://www.bloomberg.com/news/2013-01-28/new-york-says-madoff-trustee-waited-too-long-to-stop-merkin-deal.html | work=Bloomberg | first=Linda | last=Sandler | title=New York Says Madoff Trustee Waited Too Long to Stop Merkin Deal | date=January 28, 2013}}

{{Reflist|colwidth=30em}}

• [https://online.wsj.com/public/resources/documents/Merkin.exhibitsone0407.pdf# Deposition of J. Ezra Merkin]: Madoff Charities Investigation, State of New York (January 30, 2009)
• [https://online.wsj.com/public/resources/documents/WSJ-20090406-MerkinComplaint.pdf Civil Fraud Complaint] State of New York (April 6, 2009)
• [https://online.wsj.com/public/resources/documents/Merkinexhibitstwo0407.pdf Exhibits, Civil Fraud Complaint]
• [https://online.wsj.com/public/resources/documents/Merkinexhibits30407.pdf# Continued Exhibits, Civil Fraud Complaint] State of New York, (April 6, 2009)
• [http://news.findlaw.com/hdocs/docs/madoff/nymerkin40609cmp.html Complaint and Exhibits] State of New York v. J. Ezra Merkin and Gabriel Capital Corp. (April 6, 2009) FindLaw
• [https://web.archive.org/web/20090623222800/http://www.nyunews.com/news/city-state/madoff-investor-was-warned-by-nyu-alumnus-1.1723015 Victor Teicher Deposition], NYU v. Ariel Fund Ltd., Gabriel Capital Corp., J. Ezra Merkin, et al. Case No. 08603803/2008
• [http://graphics8.nytimes.com/packages/pdf/business/0507madoff_Complaint.pdf Complaint against J. Ezra Merkin] (May 7, 2009)

{{DEFAULTSORT:Merkin, J. Ezra}}

Category:1953 births

Category:Living people

Category:American hedge fund managers

Category:American investors

Category:American money managers

Category:American people of German-Jewish descent

Category:American stock traders

Category:Businesspeople from New York City

Category:Cerberus Capital Management

Category:Columbia University alumni

Category:Harvard Law School alumni

Category:People from the Upper East Side

Category:Pyramid and Ponzi schemes

Category:People associated with the Madoff investment scandal

Category:People from Atlantic Beach, New York

Category:Ramaz School alumni

Category:Merkin family