New York mag makes up Madoff as a monster


The headline of New York magazine’s cover story this week, “Bernie Madoff, Monster,” is sure to raise the anti-Semitism antennae of those furthest out on the Kosacks-are-coming-ledge.

While the cover art – a caricature of Bernie Madoff made up in Joker’s attire – The story itself, however is far less incendiary than its headline, and offers a good, colorful read.

Some comments on seem to think that the article is perhaps too soft on Madoff or at least paint him as too human, but any comic buff will tell you that the best villains have a bit of humanity in their back story.

Personally, I thought the back story on J. Ezra Merkin, the erudite privileged intellectual snob who became Madoff’s biggest shill, was most interesting:

On the surface, it seemed unlikely that the fates of Bernard L. Madoff, 70, and J. Ezra Merkin, 55, should be linked. Madoff was a scrappy outer-borough striver. He still had, as one observer put it, a “whiff of Queens” about him. The nuances of economic thought didn’t interest him, and when talk turned to politics, Bernie all but glazed over. His primary interest had always been pennies and dimes and dollars, the mundanities of money. He didn’t look like a leader of Wall Street, let alone a monster. In a crowd, he barely registered — if you didn’t know who he was, you might not notice anything but his doughy smile.

In the world of the Upper East Side, everyone took notice of J. Ezra Merkin. He was an intellectual showman, a marvel of erudition, quoting Hamlet or Nathan Detroit, holding forth on Jewish law or the stylistic shifts of Mark Rothko, whose paintings he collected. He not only ran money, as Bernie did, and served his community as a leader of charities and religious groups, but he was chairman of GMAC, the finance arm of General Motors. In a community that values intellect, piety, generosity, and the wealth that is their indispensable underpinning, Merkin was a model of success. “Pious, prayerful, and profound,” said a fellow congregant. Said a business colleague, “He is one of the wisest men on Wall Street.”

But Merkin, too, was a striver, though the sources of his drive were not as obvious. Merkin is a child of privilege. His father, Hermann Merkin, had made a fortune on Wall Street and much more. The elder Merkin had a glowing reputation as a philanthropist and Jewish leader, co-founding the Fifth Avenue Synagogue and underwriting a galaxy of Jewish charities.

And yet, for all his good works, Hermann was a remote, withholding father. “Short of not living at home he couldn’t have been less involved,” says Sol Merkin, Ezra’s younger brother. At home, Ezra’s parents enforced thrift. For all the comfort of his home — there was a chauffeur, a cook, a laundress — Hermann made a point of not pampering. Money does no good, was a kind of family motto, and Hermann and his wife acted as if even slight exposure might ruin the children. Ezra shared a bedroom with two brothers, and all six kids sometimes hid food in case there wasn’t enough to go around. For Ezra there was special pressure. “Ezra, as the oldest son, got a lot in the way of expectation but not much encouragement on the other end,” says his sister Daphne, who has written movingly about her family.

Ezra responded to his distant father by pursuing him assiduously, a competitive urge that led him into philanthropy, religion, and finance, and until Madoff revealed his fraud, Ezra appeared to outdo Hermann — most notably, in the scale of his fortune.

From his father Ezra inherited another, more problematic legacy. The elder Merkin knew Bernie Madoff and admired his successes. Bernie’s unfinished edges didn’t matter to him—the toughness was the point. “Hermann was a tough immigrant, and he didn’t distinguish people so much by background,” says one person who knew him. In the early nineties, when Ezra was looking for candidates to manage the huge sums he was increasingly able to raise, his father’s imprimatur must have helped sell him on the legendary Bernie Madoff, who, it turned out, underwrote a good deal of Ezra’s lifestyle. At the heights of Ezra’s hedge-fund business, in the middle of this decade, he earned perhaps $35 million a year simply for funneling money to Bernie Madoff.

And this is how Ezra Merkin Madoffed Yeshiva University:

And so Ezra took Bernard L. Madoff Investment Securities places Bernie couldn’t have dreamed of going by himself. The list of people and institutions that Ezra Merkin put with Bernie Madoff is a kind of Jewish social register. There was Mort Zuckerman, the media and real-estate mogul, and Ira Rennert, chairman of Fifth Avenue Synagogue and owner of a 68-acre oceanfront Hamptons estate. Over 30 charities invested with Ezra, many of them with a Jewish affiliation. Ramaz was in, as was Yeshiva. Not every investor says they knew that Ezra’s fund Ascot was fully invested with Madoff, an assertion that will be at issue in forthcoming lawsuits. Ezra maintains that, at the very least, he let people know that he might invest with other managers. And in some instances, he claims he was more direct. In the case of Yeshiva, with perhaps the largest endowment of any nonprofit he managed, he did report a relationship with Bernie, though it appears not to have been the real one.

Ezra had served as chairman of Yeshiva’s investment committee since about 1994. Not long after that, the committee directed $14.5 million of Yeshiva’s endowment to Ascot, which Ezra passed along to Madoff, collecting his usual fee, initially one percent and later 1.5 percent, standard for all of Yeshiva’s money managers.

Yeshiva saw no conflict of interest or, if it did, didn’t mind. The university required nothing more than that those who served on the investment committee disclose that they were doing business with the university. The 2003 disclosure to the board, a copy of which was obtained by New York Magazine, reported that Ezra was managing about 10 percent of Yeshiva’s endowment through four different funds. For his efforts, he collected over $2 million in fees, almost $1 million for Ascot alone.

That 2003 memo stated that Madoff was Ascot’s “executing broker,” a term that means he was executing buy and sell orders, supposedly those dictated by Ascot. In fact, though Merkin looked at Madoff’s statements every month, and they were detailed and thorough, and questioned him about his accounts, he left the trading—or, as we now know, lack thereof—to Madoff. Some now wonder about the propriety of the chairman of the investment committee’s taking fees for simply passing along money to Bernie—especially since Bernie was elected to Yeshiva’s board of trustees in 1996, when Hermann served as vice-chairman. Why not just give the money directly to Bernie and save Yeshiva the fee? To some, it seemed like Ezra was skimming profits, and from an institution he loved.

Whatever fudging there’d been in the disclosures, Ezra did well for Yeshiva—in fourteen years, the fund grew 9 percent a year, even after subtracting losses for Madoff and expenses. And he did well for himself; certainly, he made at least $10 million from Yeshiva over his tenure.

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