Mort Zuckerman, whose charity lost $30 million in the Madoff fiasco, needs to grow up and learn to be a big boy. In his interview with Maria Bartiromo in Business Week, Zuckerman manages to blame everyone but himself for the loss, and conveys the clear impression that he thinks he doesn’t bear a scintilla of responsibility for blowing all that dough. “I'm not really involved in the financial world or fund management world,” he moans. “The whole thing is astounding to me.”
Oh, Mort, I’m sure it is. New flash: if you’ve been entrusted with $30 million of somebody else’s money, you’re involved in the financial world, whether you know it or not.
Zuckerman apparently gave the $30 million Ezra Merkin, who ran Ascot Partners, who then turned around and gave it all to Bernie Madoff. You know what happened next.
In retrospect, Merkin blew it—and Zuckerman blew it, too. But does it occur to him to take some responsibility for his actions? Nope. Instead, he’s calling his lawyer. “What can you do, sue him?” Bartiromo asks. Zuckerman’s answer: “Of course.”
It’s a little late for that, don’t you think? Zuckerman clearly did nothing in the way of due diligence on the front end, when he should have. And now he’s suffering the consequences. Mort, I hope (but don’t expect) that if you do sue, that a judge throws your case out immediately and requires you to pay court costs.
I haven’t seen the document, but, according to Merkin’s lawyer, “The Offering Memorandum for Ascot expressly named Madoff Securities as a prime broker for the fund in several places and accurately describes Ascot’s trading strategy.”
So Zuckerman knew Madoff was involved. If he had spent any time at all looking into Madoff’s background, he’d have found no shortage of skeptics about the returns Madoff generated. He would have seen the conflict inherent in a broker-dealer-owned fund using its parent as prime broker. And he would have known about the one-room accounting firm. Would it all have been enough for him to put his money elsewhere? Who knows? But Zuckerman’s being disingenuous to argue now that the fraud was a bolt from the blue.
Please, Mr. Zuckerman, you have no one to blame but yourself. You didn’t have to do a lot of due diligence to see the warning signs. And if you don’t think due diligence is your responsibility, you’ll get what you deserve.
But the corporate titan wants us to believe he’s a babe in the woods. “To my astonishment, the fund manager put the entire amount into Mr. Madoff’s hands. I had no idea,” he says. Well, maybe next time you’ll ask a few more questions.
There’s no end to his griping.
There are dozens and dozens of people who…thought they were investing in a multiple and diverse group of funds. If you were going to invest all this money in another fund, it seems to me you should have told everybody that you were doing this . . .
Or—and I know that this sounds radical—the investors themselves might have asked where their money was being invested. Notably, for all his whining, nowhere does Zuckerman accuse Merkin of lying to him.
Then Zuckerman has the gall to claim he did his work,
You do a certain amount of due diligence, you think you have the ability to rely on somebody based on his general community reputation, and you find out you can't. It’s not that I didn’t check [Merkin] out, but. . .
Mr. Zuckerman, this is very simple. You put your assets with Merkin. Merkin invested virtually his entire fund with Bernard Madoff. From what I know, he didn’t lie about what he was doing. Madoff turned out to be an elaborate fraud. I’m sorry, but you lose. Accept responsibility for your actions: start acting like a grown-up and stop whining!