On April 6, New York State Attorney General Andrew Cuomo filed suit against Gabriel Capital Corporation (GCC) and its principal, J. Ezra Merkin, in connection with investments by GCC-advised hedge funds with Bernard Madoff. Among the many allegations in the complaint, the complaint alleges that by failing to perform adequate due diligence on Madoff’s operations and ignoring certain warning signs of fraud, Mr. Merkin breached his fiduciary duties to fund investors and “caused representations he made to investors concerning his ongoing due diligence and oversight of outside money managers to be false and misleading.” The complaint also alleges that Mr. Merkin breached fiduciary duties to nonprofit organizations for which he served on investment committees or as investment advisor, by failing to disclose his conflicts of interest in connection with investments made by these organizations.  

Attorney General Cuomo’s suit is one of a number of lawsuits against GCC, and against other advisors of “feeder funds” (conduits for investment) associated with Bernard Madoff, including various lawsuits by private investors and a complaint filed by Massachusetts’ primary securities regulator.  

http://www.oag.state.ny.us/media_center/2009/apr/pdfs/merkin%20summons%20complaint.pdf%20-%20Adobe%20Acrobat%20Professional.pdf