Bernie Burns NYU For $94 Million

NYU 'BERNED' FOR $94 MILLION
The New York Post by DAREH GREGORIAN, BRUCE GOLDING and MURRAY WEISS - January 7, 2009

New York University lost as much as $94 million when a hotshot money manager, against the school's wishes, invested the cash with swindler Bernie Madoff, its lawyers told a judge yesterday. Ariel Fund Ltd., run by financier and GMAC Chairman Ezra Merkin, "engaged in purposeful deceit" by putting the funds with Madoff, NYU lawyer Beth Kaswan complained.

In response, Manhattan Supreme Court Justice Richard Lowe continued a restraining order against the once-mighty Ariel Fund. In court papers, the school said it is already out $24 million because of Merkin's secret dealings with Madoff. Kaswan said the university would be in danger of losing its entire $94 million investment without the judge's help. "You had a pattern of grossly negligent conduct by Mr. Merkin," and if he's allowed to continue running the Ariel Fund, "NYU won't see a dollar of its investment." Merkin lawyer Andrew Levander, denying any wrongdoing, said his client should be allowed to wind down the fund and repay all investors what he can. The lawyer said Merkin, like NYU, is a victim of Madoff, the hedge-fund trader who perpetrated a $50 billion Ponzi scheme. "It's a tragedy of epic proportions," Levander said. "[Merkin's] lost tens and tens of millions of dollars." School officials, however, claim they specifically asked Merkin in October not to invest their money with Madoff, citing a lack of oversight for Madoff's investments, court papers say.

The school discovered its wishes hadn't been heeded in a Dec. 12 letter, when Merkin told investors that Gabriel Capital, a $1.5 billion hedge fund, and Ariel would both liquidate because they had been battered by losses on Madoff investments. Levander told the judge his client was under no obligation to inform NYU about how its investments were handled. Meanwhile, prosecutors last night delivered a letter to a Manhattan federal judge bolstering their argument that he should promptly revoke Madoff's $10 million bail and lock him up pending trial. Lawyers revealed Monday that Madoff two weeks ago mailed five packages containing more than $1 million in watches, cufflinks, mittens and other items to his two sons, brother and friends. Prosecutors say the mailing violated an injunction barring Madoff from dissipating assets, which could be subject to seizure by the government at some point, and warned there was a risk he would trying to hide other assets while out on bail. Sources said Madoff mailed eight to 10 gold antique watches, among them Patek Philippe and Vacheron Constantin timepieces, each worth between $30,000 and $70,000. With Post Wire Services dareh.gregorian@nypost.com