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New York Attorney General Eric Schneiderman accused Bernie Madoff trustee Irving Picard of twiddling his thumbs while Schneiderman was busy recovering $410 million for victims of the convicted Ponzi schemer.
“The Trustee sat back watching while the NYAG developed a case,” Schneiderman said in court papers. “But he waited too long. He should now have to live with the consequences of his strategy.”
Schneiderman is fighting Picard’s efforts to block a $410 million settlement the AG brokered with fallen hedge-fund honcho Ezra Merkin, who acted as one of the biggest Madoff “feeder” funds.
In 2009, then-AG Andrew Cuomo sued Merkin for steering $5 billion of his investors’ cash (including money from New York University and real-estate magnate Mort Zuckerman) to Madoff, often without their knowledge.
Merkin was nothing more than a “glorified mailbox” when Madoff’s multibillion-dollar Ponzi scheme was uncovered, Cuomo said.
Last June, the AG’s office reached a $410 million settlement with Merkin, which was approved by the court-appoint trustees for Merkin’s various funds.
Picard, however, has refused to get on board.
A few months after the deal was announced, the trustee tasked with cleaning up Madoff’s scheme sued to block the settlement between Schneiderman and Merkin.
In his suit, Picard argued that he has first dibs on any Merkin funds collected for victims. He also claimed that if the settlement is approved, he will be left with nothing for his victims.
Merkin’s camp also blasted Picard’s suit seeking an injunction. Among other things, lawyers for Merkin argued that Picard stands to win at most a measly $8 million from Merkin’s Ascot fund, which was almost entirely invested in Madoff.
A good chunk of the AG’s settlement is being funded by the sale of Merkin’s private art collection in 2009, which raised $193 million after taxes.