Madoff Victims' Advocate Sues Ezra Merkin

Trustee wants $558M back from feeder-fund withdrawals
By Jason Farago,  Newser Staff
Posted May 8, 2009 7:24 AM CDT
Madoff Victims' Advocate Sues Ezra Merkin
In this March 12, 2009 file photo, Bernard Madoff arrives at Manhattan federal court in New York.   (AP Photo/ Louis Lanzano, file)

(Newser) – The trustee representing investors who lost their savings with Bernie Madoff is suing Ezra Merkin, the feeder-fund manager who withdrew $558 million from Madoff's shop before the collapse of his Ponzi scheme. Irving Picard, who is responsible for winding down Madoff's defunct company, alleges that Merkin should have known from the abnormally high and consistent returns that Madoff's business was fraudulent. It's the second suit Picard has filed in a week, reports the Wall Street Journal.

Last Friday Picard made similar allegations of complicity against Stanley Chais, who ran a feeder fund for Madoff and who withdrew $1 billion over more than a decade. Federal prosecutors are also investigating whether they can bring criminal charges against Merkin, Chais, and other investors who fed cash to Madoff. Merkin's lawyer dismissed the lawsuit as having "no legal basis."
(Read more Ezra Merkin stories.)

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