New York – Merkin Intimidated Co-Op Board While Building Funds Madoff Lost

New York – Over four weeks, J. Ezra Merkin lost more than $2 billion with Bernard Madoff, board positions with at least three institutions and his flagship fund, which is liquidating. He also lost his anonymity.

Until Merkin, 55, got caught up in the Madoff scandal, some residents of 740 Park Avenue in Manhattan didn’t know their bearded neighbor was a money manager. Some guessed he was a rabbi because he wore a skullcap, according to Michael Gross, author of “740 Park: The Story of the World’s Richest Apartment Building.”

“Ezra Merkin was a figure of some mystery, even to people in and around the building where he lived,” Gross said in an interview.

His no-nonsense demeanor impressed the co-op board, though, and members were so intimidated they asked few questions before he moved in, Gross said.

Merkin was equally brusque with executives of a New York charity he asked to invest with one of his funds, said Laura Goldman, who runs money management firm LSG Capital in Tel Aviv. After arriving more than an hour late to a meeting in 2000, he became impatient when asked for details, Goldman recalled. The charity, which she served as an informal adviser and wouldn’t name, decided against giving him funds.

“This Merkin had sway over people like crazy. They were grown men and they barely got out of the meeting without signing over their lives,” Goldman said. “He’s very arrogant, and when you ask questions he makes it like, ‘Why are you asking me a question?’”

After losing money for Manhattan clients including New York University and the Ramaz School, a private Jewish school, Merkin may no longer be able to avoid answering.

‘Sorrow of All Investors’

He is the defendant in at least four lawsuits that say he deceived investors by not telling them he placed their money with Madoff, who was arrested Dec. 11. Madoff told employees his investment firm was a “giant Ponzi scheme” of perhaps $50 billion, according to a criminal complaint.

“Mr. Merkin shares the sorrow of all investors who have been cheated by Madoff,” Andrew Levander, Merkin’s lawyer, said in an e-mailed statement. Merkin, whose own losses are in the “many tens of millions of dollars,” declined to comment, Levander said.

In the Madoff affair, “everybody’s a victim,” said Joseph Sprung, a member of the Fifth Avenue Synagogue, co-founded by Merkin’s father Hermann. “They have to deal with the betrayal. How would you feel if your fiancée was cheating on you and that betrayal was publicized all over?”

Merkin followed his father as president of the synagogue, whose congregants include financiers Ira Rennert and Ron Perelman, and Nobel laureate Elie Wiesel. On Tuesday nights Merkin often attends a Talmud class, according to Rabbi Yaakov Kermaier.

‘Renaissance Man’

A New York Yankees fan, Merkin “is a Renaissance man, at ease discussing literary classics, Talmudic texts, modern art or baseball strategy,” Kermaier said.

Merkin is also “considerate, articulate, intellectual and he seems thoughtful,” said Bruce Greenwald, who served as a governor with Merkin of Bard College’s Levy Economics Institute. “I’m shocked that he got sucked into this.”

The institute at Bard, in Annandale-on-Hudson, New York, removed Merkin last month after discovering it lost $3 million in one of his funds. The financier also resigned as chairman of the investment committee and as a trustee of New York’s Yeshiva University, which said it lost $14.5 million in investments, fictitiously valued at $110 million, mostly through his funds invested with Madoff.

Merkin also left as chairman of the investment committee of UJA-Federation of New York, a charity.

Wall-sized Rothkos

He remains chairman of GMAC LLC, the finance arm of General Motors Corp. now part-owned by Cerberus Capital Management LLC, which is controlled by Stephen Feinberg, an occasional investing partner of Merkin’s.

Merkin’s setbacks have inspired phone calls from collectors inquiring whether he and wife Lauren are interested in selling their $150 million collection of Mark Rothko paintings, said Ben Heller, 83, an art adviser to the money manager. The abstract works, some as large as nine feet by 15 feet (2.7-by-4.6 meters), appear to dissolve into the walls of the family duplex at 740 Park, said London-based critic David Anfam, who’s visited the home.

“If you go up to that apartment, you would drop your socks,” said Heller, who helped the couple arrange subdued rugs, furnishings and dim lighting to complement the Rothkos.

The Merkins’ corner apartment, purchased for $11 million in 1995, had 18 rooms and eight bathrooms when built. It occupies two floors, according to documents obtained by Gross.

Blackstone Group Chairman Stephen Schwarzman and cosmetics billionaire Ronald Lauder are neighbors in the 75-year-old building, property records show.

Merkin also owns a home in Atlantic Beach, New York, on the south shore of Long Island valued at $1.7 million, and a property in Eagle County, Colorado, worth $506,000, according to records.

Born in April 1953, Ezra is the eldest son of Hermann and Ursula Merkin. They had six children, among them Daphne Merkin, a writer who has contributed to the New York Times and wrote a novel about growing up with a distant father who sheltered his daughters from the family finances. An investor who died in 1999, Hermann Merkin endowed a Manhattan concert hall that bears the family name and was a Yeshiva trustee for three decades.

Ezra graduated from Columbia College in New York magna cum laude in 1976 and from Harvard Law School in Cambridge, Massachusetts, with honors, according to his official biography.

After practicing law at the New York firm Milbank, Tweed, Hadley & McCloy from 1979 to 1982, he worked at Halcyon Investments from 1982 to 1985. Later that decade he became managing partner in Gotham Capital LP and Ariel Capital LP.

‘Respectable Person’

Around 2000, Merkin began placing a portion of Ariel’s funds into an account with Madoff, according to a statement by a Merkin manager who was deposed as part of a lawsuit by NYU.

“Ezra knew Madoff through his father as a respectable person,” said Michael Steinhardt, a former New York hedge-fund manager who estimates he lost $2 million investing with Merkin.

The evening before Madoff’s arrest, Merkin and his wife hosted patrons of Jerusalem’s Israel Museum at their Park Avenue duplex. The Friday night after the arrest, Merkin appeared at the synagogue for a 100-person dinner honoring a member, said the rabbi, Kermaier.

“Nobody could have possibly expected Ezra to show up,” Kermaier said. “He felt that as president of the synagogue and someone who loves this community, he should be there.”