Steinhardt, Ex-Hedge Fund Manager, Lost $2 Million to Madoff
Steinhardt, Ex-Hedge Fund Manager, Lost $2 Million to Madoff
By Linda Sandler
Jan. 1 (Bloomberg) -- Former New York hedge-fund manager Michael Steinhardt said he lost about $2 million investing with financier Ezra Merkin, who funneled clients’ money to alleged fraudster Bernard Madoff.
“He never told me he was investing with Madoff, and he probably didn’t tell most of his clients, and I understand why,” Steinhardt said yesterday in a phone interview. “Madoff, according to Ezra, was engaged in an analogous type of arbitrage so it was logical for Ezra to focus on Madoff.”
Steinhardt, 68, wound down his business in the 1990s with a fortune that Forbes magazine estimated at $500 million. Madoff, 70, is confined to his home on Manhattan’s Upper East Side after being accused of defrauding multiple investors of $50 billion. Merkin, the chairman of GMAC LLC, is liquidating one of his hedge funds after losses from investing with Madoff. He is a longtime acquaintance of Steinhardt, Steinhardt said.
“Ezra knew Madoff through his father as a respectable person,” Steinhardt said. “If he gave some of my money to Madoff and earned fees for doing so, it was not inconsistent with his agreement to manage my money in the best way he could.”
Steinhardt, who focused on collecting art and charities after retiring from managing other people’s money, is chairman of New York University’s investment committee.
NYU Lawsuit
NYU, the largest private university in the U.S. by enrollment, sued Merkin and his funds for $24 million on Dec. 24, saying he put its money with Madoff without telling the university or doing due diligence. The funds were invested with Merkin before Steinhardt took over at the investment committee about 10 years ago, Steinhardt said.
Merkin’s Ascot Partners LP fund lost virtually all its $1.8 billion of assets after investing with Madoff, according to a separate lawsuit filed by New York Law School on Dec. 16. Gabriel Capital LP, a $1.5 billion hedge fund also managed by Merkin, will be liquidated after incurring losses with the alleged fraudster, Merkin said in a Dec. 18 letter to clients.
Andrew Levander, a lawyer for Merkin, couldn’t immediately be reached for comment.
Beneficiaries of more than $100 million of Steinhardt’s charity include NYU, the Metropolitan Museum of Art, where his name is on one of the Greek galleries, and programs and museums in Israel.
To contact the reporter on this story: Linda Sandler in New York at lsandler@bloomberg.net.
Last Updated: January 1, 2009 00:01 EST
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