NY University sues fund exec over Madoff

By Grant McCool

NEW YORK (Reuters) - New York hedge fund executive Ezra Merkin has been sued again for entrusting investments with confessed swindler Bernard Madoff, this time by New York University, which said it lost about $24 million (£16 million).

The complaint was filed on Tuesday in New York State Supreme Court by NYU, which describes itself as the largest private university in the United States. The lawsuit is the latest in a series against Merkin and other funds during the past week as investors seek to recover losses.

Merkin's attorney Andrew Levander was not available for comment on the lawsuit, his office said. In a statement responding to a lawsuit in federal court on December 16, Levander said Merkin and his family were among Madoff's biggest victims.

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.

Merkin, who is chairman of GMAC, is named in the lawsuit brought by NYU, along with his Gabriel Capital LP fund and Ariel Fund. GMAC is the finance business owned by General Motors and private equity firm Cerberus Capital Management.

"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. "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, a fund he founded that lost an estimated $1.8 billion from investing money with Madoff.