A well-known philanthropist, J. Ezra Merkin helped pave the way for what would become Bernie Madoff's affinity fraud scandal. Merkin operated Ascot Partners, one of the largest feeder funds into BLMIS fueling the steady stream of investments through his connection among the wealthy Jewish communities of both New York and Palm Springs. Merkin began switching his investors over to BLMIS in 1992 and by 2005 he was making close to $35 million annually for merely funneling the money to Madoff. In May of 2009, New York Attorney General Andrew Cuomo filed fraud charges against Merkin accusing him of intentionally directing investors' funds into BLMIS to keep the Ponzi scheme alive. The case was eventually closed in favor of Merkin as the court ruled he held no in-depth knowledge of the fraud committed. Court appointed trustee Irving Picard also filed a suit against Merkin in 2009, though the case suffered the same fate. Separately, Merkin promised to relinquish any funds he accrued from the Madoff Ponzi scheme and eventually relinquished control of his three feeder funds—Ascot Partners, Gabriel Capital Corp., and Ariel Fund Ltd.—to Guidepost partners for liquidation. Merkin has since agreed to pay back $405 million to the investors of his hedge funds he led astray, though Picard still continues an ongoing suit to $500 million in assets from Merkins funds and beneficiaries.
