In a setback for the trustee seeking money for the former customers of imprisoned fraudster Bernard Madoff, an appeals court refused to void two settlements benefiting investors who sued “feeder funds” that sent their money to Madoff.
Friday’s unanimous decision by a three-judge panel of the 2nd US Circuit Court of Appeals in New York leaves intact a $410 million settlement with J. Ezra Merkin, a Wall Street hedge fund manager who oversaw the Ariel Fund and Gabriel Capital, and an $80 million settlement with Fairfield Greenwich.
The Merkin settlement had been negotiated by New York Attorney General Eric Schneiderman and also resolved claims by Bart Schwartz, the receiver of the Ariel and Gabriel funds.
Irving Picard, the trustee liquidating Bernard L. Madoff Investment Securities, claimed the settlements impeded his ability to recoup fraudulent transfers that Madoff made to Merkin and Fairfield, and that belong to the firm’s estate.