Money manager Ezra Merkin has agreed to pay $410 million to settle a lawsuit brought by New York State that accused Merkin of secretly steering client money to Ponzi schemer Bernard Madoff, according to New York Attorney General Eric Schneiderman.
"By holding Mr. Merkin accountable, this settlement will help bring justice," Schneiderman said in a statement.
Justice Richard Lowe signed off on the settlement on Friday, according to a source, and Schneiderman is expected to announce it today.
Under the agreement, Merkin will pay $405 million to compensate investors over three years, the source said. The other $5 million will go to the state.
Attorney Andrew Levander, who represents Merkin, did not immediately respond to an email yesterday.
The settlement does not resolve a separate case brought against Merkin by Irving Picard, the trustee seeking money for all of Madoff's victims. Picard is trying to clawback $500 million that Merkin and his funds withdrew from accounts with Madoff.
The New York lawsuit, brought in 2009, said Merkin "recklessly" fed some $2.4 billion from investors in his funds into Madoff's Ponzi scheme. It accused Merkin of self-dealing, reckless conduct and gross negligence.