Madoff Crony Ezra Merkin Resigns as GMAC Chairman
 Ezra Merkin |
 Edwin Black |
Late this afternoon, GMAC Financial Services LLC announced that Chairman J. Ezra Merkin is stepping down effective immediately, as GMAC prepares to name a new board of directors.
At the time that the original report was published on December 30th, CNN News had missed this story completely, even though GMAC had just received $5 billion of Federal Bailout funds. As of the time of this posting CNN.com has no mention of the Merkin resignation. Instead, CNN continues to find ways to publish falacious stories about how evil Israel is and how they are committing massacres in Gaza.
By way of background, J. Ezra Merkin is the man who lost billions of dollars for investors via the ill-fated Ascot Fund and Gabriel Fund. Both funds, under Merkin’s personal direction, fed all or most of its investment monies to Madoff’s Ponzi scheme.
Lawsuits against Merkin for financial misconduct are mounting. New York Law School, which lost $3 million investing in the Ascot fund, was among the first to file a lawsuit against Merkin and its accountancy firm, BDO Seidman. The class action lawsuit filed in U.S. District Court in Manhattan said the defendants "recklessly or with gross negligence caused and permitted $1.8 billion, virtually the entire investment capital of Ascot" to be handed over to Madoff.
A second class action lawsuit charges that Merkin “facilitated” the Madoff scandal “recklessly or with gross negligence and/or in breach of fiduciary duties.” This suit was launched by Scott Berrie, a Gabriel investor. Berrie alleges, “Plaintiffs investment in Gabriel has been decimated as a direct result of defendant Merkin's abdication of his responsibilities and duties as General Partner and Manager of Gabriel and its investment funds.” The Berrie suit specifies that Merkin is chairman of GMAC.
A confidential 60-page, 2006 Ascot memorandum obtained by The Cutting Edge News states on page 23, “All decisions with respect to the management of the capital of the Partnership are made exclusively by J. Ezra Merkin. Consequently, the Partnership's success depends to a great degree on the skill and experience of Mr. Merkin.”
Wall Street financial analysts have been mystified by the manner in which GMAC engineered banking status. “We believe GMAC has been less than clear in detailing how it would achieve adequate capital levels,” CreditSights analyst Richard Hoffman recently declared. “But with the primary regulator on board, the capital raise machinations seem almost a moot point.”
GMAC’s transition to a bank diminishes the threat of credit evaporating for GM dealers who use the company to finance most of their inventory. GMAC also makes a third of the car loans that go to GM car and truck buyers.
The Fed used its emergency powers Christmas Eve to grant GMAC’s bank conversion, stating that it had to act in order to avoid further turmoil in the nation’s economic downward spiral.
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