Ezra Merkin, a hedge fund manager who lost $1.2 billion of his clients' money to Ponzi schemer Bernard Madoff (pictured here,) settled with the New York attorney general for $410 million.
NEW YORK (CNNMoney) -- A hedge fund manager who lost more than $1 billion of his investors' money to Ponzi schemer Bernard Madoff has agreed to pay his clients more than $400 million in compensation, the New York attorney general said Monday.
J. Ezra Merkin, the hedge fund manager, agreed to pay $405 million to compensate investors and another $5 million to the state of New York to cover fees and costs, the office of Attorney General Eric Schneiderman said.
"With this settlement, Ezra Merkin has made an enormous personal commitment to addressing his investors' losses from Madoff's unthinkable fraud," said Steven Goldberg, spokesman for Merkin's lawyer, Andrew Levander.
As part of the agreement, Schneiderman is dropping the civil charges that he filed against Merkin back in 2009 for misleading investors about the fact that he was taking their money and investing it with Madoff.
"In misleading offering documents and quarterly reports, Merkin concealed Madoff's role and misrepresented the role he was playing in managing the funds," said the attorney general's office, in a press release. "Acting primarily as a marketer and middleman, Merkin obtained hundreds of millions of dollars in management and incentive fees from his investors."
The New York attorney general said that Merkin invested more than $2 billion in four funds with Madoff, who is currently served a 150-year sentence for orchestrating the largest, most sweeping Ponzi scheme in history. Merkin's funds lost more than $1.2 billion of his investors' money, even as Merkin himself was paid hundreds of millions of dollars in fees, according to Schneiderman.
The attorney general did not, however, accuse Merkin of knowing that Madoff was operating a Ponzi scheme.
Madoff's scheme fell apart with his arrest on Dec. 11, 2008. He pleaded guilty three months later and is currently serving his sentence at a medium-security federal prison in North Carolina.
Madoff, age 74, is believed to have stolen about $20 billion from thousands of investors to finance an opulent lifestyle in New York City, Palm Beach, Fla., and France.
Another Ponzi schemer, Allen Stanford, got hit earlier this month with a similarly severe sentence of 110 years.
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