Marc Rich Is One Victim Unlikely to Go to Court - Marc Rich

Marc Rich Is One Victim Unlikely to Go to Court

By ALISON LEIGH COWAN
Published: January 8, 2009
Many investors who have lost money as clients of the financier Bernard L. Madoff have done what anyone might be expected to do in that situation: seek recourse through the courts.

Guido Roeoesli/Associated Press
Marc Rich, who fled from the law, was pardoned by President Bill Clinton.

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Times Topics: Marc Rich | Ponzi Schemes | Bernard L. MadoffBut one victim, Marc Rich, would seem unlikely to go that route because of his own legal issues. Mr. Rich is the commodities trader who fled to Switzerland in 1983 to escape prosecution on charges of financial crimes and later received a pardon from President Bill Clinton on the last night of his administration in 2001.

Monika Meili, a spokeswoman for Mr. Rich’s office in Zug, told Bloomberg News on Thursday, “We can confirm that the Marc Rich Group and Marc Rich have an insignificant exposure held indirectly, which has no material impact on the overall financial situation of the group.”

The loss was $10 million to $15 million, according to someone with long knowledge of Mr. Rich’s finances who insisted on anonymity because he had not been authorized to speak.

He and another person, also knowledgeable about Mr. Rich’s finances, said the loss stemmed from Mr. Rich’s association with the money manager J. Ezra Merkin.

Mr. Merkin, a hedge fund investor whose Park Avenue firm said until recently that it had $5 billion under management, has invested for Mr. Rich for years. Mr. Merkin told his clients last month that he had entrusted more than $1 billion of their money to Mr. Madoff and that the likelihood of recovery was difficult to gauge. At least two of those clients, New York University and New York Law School, have sued Mr. Merkin, claiming he mishandled their money and misrepresented how he operated.

Mr. Merkin’s lawyer Andrew J. Levander was traveling on business and was not available, his office said.

Andy Merrill, a spokesman for Mr. Merkin. said, “As a matter of policy, they don’t comment on specific investors.”

The idea that Mr. Rich, once a fugitive, may now turn to an American court to seek redress struck some lawyers as fraught with problems and unlikely at best. “I don’t think you’ll ever see Marc Rich personally,” as a plaintiff in an American courtroom, said John F. Fornaciari, a Washington defense lawyer at Sheppard Mullin, who stifled a laugh about the legal complications stemming from the flight from justice and the contested pardon.

“If there’s some way for him to sue because the investments were made by a corporation, and it was arguably corporate money, and it had a president and it wasn’t him, and they lost money in the Madoff scandal, then that corporation might be able to sue without him being required to show up,” Mr. Fornaciari said. “But if there’s anything that required him to show up, he’s not coming.”

Gerald B. Lefcourt, a former president of the National Association of Criminal Defense Lawyers, also gauged the likelihood of Mr. Rich’s pressing a claim as “little or none.”

“He’ll never appear for discovery proceedings that will be required, and he’s not going to be sympathetic to any party, including the courts, after his failure to appear, notwithstanding the fact he was pardoned,” Mr. Lefcourt said. The pardon backfired in some ways by igniting public outrage and inviting prosecutorial interest in the process for a man who has generally sought to keep a low profile. For that reason, one longtime associate said he doubted Mr. Rich, who he said was not an acquaintance of Mr. Madoff’s, would seek any relief from the courts.

Born in Antwerp, Belgium, 74 years ago, Mr. Rich moved to the United States as a boy and rose to become a swashbuckling figure in international finance. He married Denise Eisenberg, now a songwriter, in 1966. They divorced 30 years later, but he relied heavily on her contacts as a Democratic fund-raiser to help obtain his pardon. He also enlisted scores of other influential people, including Ehud Barak, then prime minister of Israel, and the conductor Zubin Mehta, to help persuade Clinton administration officials to grant the pardon.

Mr. Rich apparently knew Mr. Merkin through the Fifth Avenue Synagogue, where he was once a member. Mr. Merkin’s father, Hermann, was a founder of the synagogue a half-century ago and Mr. Merkin is its current president.

Many of the charitable institutions that once welcomed Mr. Merkin into their inner sanctums, boards and investment committees because of his investment acumen and success have been politely accepting his resignation from those roles in recent weeks as he battles to save his reputation and fortune from angry creditors.

Rabbi Yaakov Kermaier of the Fifth Avenue Synagogue, several of whose members have also had serious financial setbacks in recent weeks because of their association with Mr. Madoff or Mr. Merkin, said in an e-mail message this week that Mr. Merkin’s term was winding down, though not because of the scandal.

“The elections for synagogue president (and other officers) are in the spring, though the formal nomination process begins months earlier,” the message said. “Ezra Merkin’s presidential term concludes this coming spring, and because of constitutional term limits, he is ineligible to run for another term as president. Ezra has led our community with extraordinary dedication and integrity, and I sincerely hope that after he concludes his presidential term, he will continue to serve our congregation in other capacities.”

Zachery Kouwe contributed reporting.