Details of the tens of millions of dollars that Ezra Merkin pocketed by funneling his clients cash to scammer Bernie Madoff — plus alleged lies Merkin told to his investors — could be laid bare in a New York court as soon as tomorrow.
Justice Richard Lowe, responding to a request by New York University, said on Friday he is weighing whether he will unseal five crucial documents that detail exactly what Merkin told investors as he was giving their cash to Madoff — and how much in fees he earned for “managing” their investment.
NYU is suing Merkin and his $1.8 billion Ariel hedge fund over $24 million of the school’s funds the billionaire investor lost with Madoff — even though the university claims it never gave him permission to invest with the fraudster.
Merkin invested every penny of the Ariel fund with Madoff.
The besieged money manager’s lawyers are desperate to keep the documents sealed as they claim the details might put some of Merkin’s so-called “sub managers and advisors” at risk.
The documents are said to include details of conversations Merkin and his cohorts had with investors in his hedge fund and are expected to show that Merkin promised to do thorough due diligence and invest in a broad array of stocks.
Despite such promises, NYU alleges, Merkin simply handed the money over to his pal, Bernie Madoff, who is currently languishing in jail awaiting sentencing after pleading guilty to 11 counts of fraud.
Merkin denies the claims made against him by NYU and has said all along that he had no duty to inform his clients how or where he was investing their cash.
Also included in the sealed documents are personal details related to Merkin’s close advisors — such as fund manager Victor Teicher.
Merkin’s lawyers are particularly worried that the documents — if unsealed — will not only reveal how much Teicher got paid for helping Merkin but also his wife’s address.
Sources say that the documents — which include depositions of Merkin and his advisers — also reveal names and other details of Ariel investors.
In Manhattan state court on Friday, Lowe claimed to be “confused” by NYU’s demand to unseal the documents as the university’s lawyers had already made an agreement with Merkin’s legal team to have them sealed.
But Joseph Guglielmo, a lawyer for Scott & Scott, representing NYU, said: “We believe the entire record should be made available to the public.”
The documents are also understood to hold details of the ongoing investigation into Merkin’s affairs by New York Attorney General Andrew Cuomo.