US News

NYU $LAPS BERNIE’S HEDGE PAL

Hedge-fund founder Ezra Merkin engaged in “deliberate ignorance” to benefit from investing client money with Bernard Madoff, a lawyer for NYU, which is suing Merkin and his funds, charged yesterday.

Attorney Beth Kaswan made the assertion in Manhattan Supreme Court, where a judge last month temporarily barred Merkin from liquidating his Ariel Fund Ltd., a defendant in the suit.

NYU, the nation’s largest private university and among many institutions and individual investors seeking to recover losses in the Madoff scandal, said in its December lawsuit that it lost $24 million when funds run by Merkin invested money with Madoff without its consent.

“He engaged in deliberate ignorance in order to line his pocket; that’s what he did wrong,” Kaswan told Justice Richard Lowe in court yesterday.

Besides Ariel, the lawsuit also names Merkin and another fund, Gabriel Capital Corp, as defendants. In January, Merkin resigned as chairman of GMAC LLC so the finance company would be eligible to receive U.S. taxpayer funds.

“The essence of this case is bare displeasure,” Merkin’s lawyer Andrew Levander said in court. “I understand that they are upset, but that doesn’t mean they have a cause of action.”

Merkin has also been sued in US District Court in Manhattan for his management of Ascot Partners LLP, a fund he founded that lost an estimated $1.8 billion with Madoff.