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NEW YORK — The trustee overseeing the liquidation of Bernard Madoff's assets sued a prominent hedge fund manager for more than $500 million on Thursday, claiming he was aware the disgraced financier was a swindler.
The complaint filed in bankruptcy court in Manhattan called J. Ezra Merkin "a sophisticated investment manager who was a close business and social associate of Madoff."
Merkin managed several funds through his Gabriel Capital Corp. that withdrew more than $500 million in "nonexistent principal" from Bernard L. Madoff Investment Securities in the 13 years before Madoff's massive Ponzi scheme imploded.
In addition, the suit said Merkin "'earned' tens of millions of dollars in management and performance fees, even though he knew or should have known that (the firm) was engaged in fraud."
A lawyer for Merkin, Andrew Levander, said the claim had no basis and that Merkin would fight it "vigorously."
Madoff, 70, pleaded guilty in March to charges that his secretive investment advisory operation was a multibillion-dollar scam. The former Nasdaq chairman faces up to 150 years in prison.
The court-appointed trustee has frozen Madoff's bank accounts, sold off legitimate portions his business and filed suits to reclaim ill-gotten gains of his fraud. The money will be used to pay claims brought by thousands of burned investors.
