Marc Rich among those facing Madoff losses

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Marc Rich among those facing Madoff losses

By Alison Leigh Cowan Published: January 9, 2009

Many investors who have lost money as clients of the financier Bernard Madoff have done what anyone might be expected to do in that situation: seek recourse through the courts.

But one potential victim, Marc Rich, is not likely to go that route because of his own legal issues. Rich is the commodities trader who fled to Switzerland in 1983 to escape prosecution for 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 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 with Rich's finances who insisted on anonymity because he had not been authorized to speak.

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

Merkin, a hedge fund investor whose New York firm claimed until recently to have $5 billion under management, has been investing for Rich for years. Merkin told his clients last month that he had entrusted more than $1 billion of their money to Madoff and that the likelihood of recovery was difficult to gauge. At least three of those clients, including New York University, New York Law School and an individual investor, have sued Merkin for mishandling their funds and for misrepresenting how he operated.

Merkin's lawyer, Andrew Levander, was said by his office to be traveling on business and unavailable.

A spokesman for Merkin at Finsbury, Andy Merrill, said: "As a matter of policy they don't comment on specific investors."

The idea that Rich, the onetime 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," said John Fornaciari, a Washington defense lawyer at Sheppard Mullin, who had to stifle a laugh thinking 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," Fornaciari said, "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. But if there's anything that required him to show up, he's not coming."

Though the pardon backfired in some ways by igniting public outrage and inviting prosecutorial interest in the process, Rich has generally sought to keep a low profile. One longtime associate said he doubted Rich, who he said was not an acquaintance of Madoff's, would seek any relief from the courts.

Born in Antwerp 74 years ago, Rich moved to the United States as a boy. 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 officials to grant the pardon.

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

Many of the charitable institutions that once welcomed 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.

Yaakov Kermaier, the rabbi of Fifth Avenue Synagogue, several of whose members have also become potential victims of Madoff because of their association with Merkin, said in an e-mail message this week that 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," he wrote in an e-mail message. "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.