Ponzi Scheme Investor to Sell Art Collection

After weeks of negotiations between J. Ezra Merkin and Attorney General Andrew M. Cuomo, the New York financier who lost more than $2.4 billion of his clients’ money in Bernard L. Madoff’s Ponzi scheme, has agreed to sell his famed art collection today for $310 million. The two sides have finally agreed to put almost $191 million in an escrow account that could eventually be used to repay investors. Justice Richard Lowe of the New York State Supreme Court is expected to approve the art deal, The New York Times reported.

The art collection, includes 15 pieces by the painter Mark Rothko and the sculptor Alberto Giacometti. Merkin was paying $60,000 a month for insurance and had $61.3 million left in loans originally taken out to buy the art.

“This will preserve assets that, if our litigation is successful, will provide restitution to victims of Mr. Merkin’s alleged fraud. As Mr. Merkin continues to defend against the actions brought against him by the New York Attorney General and others, he and his wife have decided to sell the core of their art collection in a private sale,” a spokesman for Merkin said in a statement. “The Merkins believe the lawsuits are without merit and have agreed, without prejudice to their rights, to place the net proceeds of the sale in escrow while the litigation continues.” Cuomo’s office said in a statement.

Merkin collected more than $470 million for managing three funds — Ariel, Gabriel and Ascot Partners — over the last decade. The three funds are said to have about $1.4 billion in assets remaining, including about $700 million in Ariel, which Merkin has continued to oversee. In April, Mr. Cuomo officially charged Merkin with lying to his investors about how he was handling their money. A month later, Merkin agreed to surrender the assets in his three investment funds to a liquidator.