2008-12-25 — bloomberg.com
New York University, the largest private university in the U.S. by number of students, lost $24 million in investments managed by Bernard Madoff, the institution said in a lawsuit filed against J. Ezra Merkin, Gabriel Capital LP fund and Ariel Fund Ltd.
Merkin’s hedge funds invested NYU’s money with Madoff without telling investors or proper due diligence, the school alleged in a complaint filed yesterday in New York state court in Manhattan. NYU had $94 million invested in Ariel, which operated as a limited partnership with Merkin and Fortis Bank, according to the lawsuit. Fortis is also named as a defendant.
The NYU claim adds to a growing list of suits by Madoff victims against feeder funds. Gabriel Capital, a $1.5 billion fund, plans to liquidate due to Madoff losses, Merkin said in a Dec. 18 investor letter. The fund lost 39 percent this year through Nov. 30, mirroring the drop in the S&P 500 Index.
This is going to be a huge mess and it is going to wipe out a lot of feeder funds. The reason is that it is fraud to re-invest client funds without telling them with who or how those funds are being managed.
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