New York's attorney general brought civil fraud charges against hedge fund operator Ezra Merkin on Monday, saying he duped investors by secretly steering $2.4 billion in client money into Bernard Madoff's Ponzi fraud.
New York Attorney General Andrew Cuomo did not accuse Merkin of knowing about Madoff's massive Ponzi fraud, but said in his lawsuit that Merkin ignored irregularities and other glaring red flags related to Madoff's investments.
A lawyer for Merkin could not immediately be reached for comment.
The complaint, filed in New York State Supreme Court, said investors, including several prominent charities and nonprofits, entrusted their investments to Merkin. The hedge fund manager then steered client money to Madoff without their permission, in exchange for $470 million in fees, Cuomo contends.
Merkin profited enormously from Madoff's scheme, reaping huge commissions while investors lost all their money, Cuomo said.
(Reporting by Martha Graybow; Editing by Lisa Von Ahn)