J. Ezra Merkin*
BA, Columbia University 
JD, Harvard University
Poor Ezra Merkin. All he did was help people invest their money with Bernie Madoff.
Okay, that’s not exactly accurate. See, he had his own hedge funds, including one called Ascot Partners, and because people liked him and thought he was a stand-up guy—especially fellow congregants of the Fifth Avenue Synagogue—they were happy to invest with him. But it wasn’t just about familiarity, friendship, mishpacha. Ascot appeared to be solid; the Wall Street Journal said Merkin was “revered for his ability to ferret out value in… bombed-out stocks and distressed bonds,” and was hands-on, adopting “a selective approach in evaluating potential investment situations, generally concentrating on relatively fewer transactions that he can follow more closely.”
It didn’t hurt that he was conspicuously successful, with an $11 million eighteen-room apartment in the best building on Park Avenue, $300+ million worth of Mark Rothkos, and mountains of other impressive shit. He could hold forth on many subjects. He had such gravitas. His nicknames were Ezra the Wise and The Rabbi, for Christ’s sake. Moreover, he was the son of the founder of the Fifth Avenue Synagogue, probably the wealthiest shul in the world. And J. Ezra was its president! What could possibly go wrong?
In reality, Ascot was not a hedge fund, but a chute leading directly to another hedge fund, and that other hedge fund was not a hedge fund either, but Madoff’s Ponzi swindle. Merkin’s clients gave him their money with the understanding that he would tend it responsibly and profitably. Instead, he reamed off his management fee* and secretly slipped the dough to Madoff—who wasn’t even a member of his blue-chip temple! If and when Merkin was asked whether Ascot had anything to do with Madoff, he lied and said that supersafe Morgan Stanley, not sketchy Madoff, was safeguarding the swag.
All in all, Merkin funneled around $2.4 billion to Madoff from 1992 through 2008, earning himself fees (some deferred) of close to $500 million. He may have been a useless money manager, but he was a hell of a salesman.
Who were the suckers? We’ll start with Yeshiva University. Merkin, a prominent board member and chairman of its investment committee, directed about $15 million of the school’s endowment to Ascot,* for which he received his customary fee. Conflict of interest? Priceless!
Yeshiva was one of more than thirty nonprofits Merkin helped become even less profitable. New York Law School gave him $3 million. New York University: $24 million.* SAR Academy, an Orthodox Jewish school: $1.3 million. The foundation of real estate mogul and New York Daily News owner Mort Zuckerman: around $30 million. The Harlem Children’s Zone: $2.7 million. Bard College (Merkin was on the board): $3 million. Elie Wiesel’s Foundation for Humanity: $37 million—nearly its entire endowment.
And of course there were plenty of non-nonprofit clients. Something called the Calibre Fund: $10 million. Dr. Noel Wiederhorn: at least $1.75 million. Ira Rennert, owner of the biggest, ugliest house in the nation and chairman of the board of the Fifth Avenue Synagogue:* $200 million!
We know all this because the Madoff implosion and the gory details of investors’ losses—such as the Ascot money vanishing down Bernie’s reeking sinkhole—was a huge news story. In 2009 New York State charged Ezra the Wise with civil fraud for “steering $2.4 billion in client money into Bernard Madoff’s Ponzi fraud without their permission” while claiming he was the active manager of said money. He had to resign as manager of his own hedge funds, which were placed in receivership, and agree to pay $410 million to settle the New York attorney general’s lawsuit, of which $405 million was to go back to his former clients,* $5 million to the state.
Unsurprisingly, Merkin claimed he was shocked—shocked!—to learn that Madoff was a crook,* despite knowing that quite a few finance experts were suspicious of Madoff, and despite Merkin’s once joking, semiwittily, that “Charles Ponzi would lose out because it would be called the ‘Madoff scheme’” one day. Merkin also claimed to have lost a pile of his own money to Madoff, which supports his argument that he didn’t know he was dealing with a criminal while undermining any argument he may ever make that he is not a boob.
All in all, a sorry episode and, as they say, bad for the Jews. And not so great for Columbia and Harvard, either.