Financier J. Ezra Merkin was charged Monday with fraud by the New York Attorney General’s Office for his role in steering billions of dollars of investors’ funds into Bernard L. Madoff’s massive Ponzi scheme.

Merkin, according to a statement issued by the Attorney General’s office, “ignored irregularities and other glaring red flags related to Madoff’s investments.”

The 54-page complaint filed in New York State Supreme Court states that Merkin collected $470 million in management and incentive fees in return for funneling $2.4 billion to Madoff.

Merkin’s money management company, Gabriel Capital, which oversaw several funds including Ascot Fund Limited, Gabriel Capital L.P. and Ariel Fund, is also charged in the suit. In the wake of the Madoff scandal, Merkin in January stepped down from his position as chairman of GMAC, the financing arm of General Motors (GM).

It’s the second fraud suit filed against so-called third party feeder funds that invested their clients’ money with Madoff.

Massachusetts’ top securities regulator filed suit last week against Fairfield Greenwich Group, a Connecticut-based firm that invested $7 billion with Madoff while collecting hundreds of millions in fees.

The New York suit seeks unspecified damages and repayment of all fees paid to Merkin by Madoff.

The complaint says Merkin did not tell his clients that their money was going to Madoff yet represented himself as an “investing guru.” Merkin was instead a “master marketer” who used his connections as a well-known Wall Street financier to convince investors over a period of nearly 20 years to turn their money over to him.

“Merkin profited enormously from Madoff’s scheme, reaping huge commissions while investors lost all their money,” Attorney General Andrew Cuomo said in the statement. “Merkin duped individual investors, nonprofits and charities into believing he was responsibly managing their investments, when in actuality he was dumping them into history’s largest Ponzi scheme.”

Merkin is an influential figure, especially in New York, where he was prominent both on Wall Street and in social and charitable circles. While he and Madoff were still riding high, Merkin sat on the boards of such New York institutions as Carnegie Hall, Yeshiva University and the Fifth Avenue Synagogue.

The complaint alleges that two of Merkin’s “most trusted colleagues” repeatedly warned Merkin that Madoff’s returns were too good to be true.

In addition, the complaint says Merkin used “fraudulent quarterly reports, investor presentation materials and offering documents” to conceal Madoff’s role and embellished his own role.

Merkin's attorney, Andrew J. Levander, issued a statement saying Merkin will "vigorously" defend himself against "this hasty and ill-conceived lawsuit."

Levander said Merkin has been fully cooperating with Cuomo's investigation into Madoff's operations, and that, contrary to the allegations in Cuomo's complaint, Merkin's investors knew their money was going to Madoff.

"Mr. Merkin performed extensive due diligence on Madoff and his trading strategy, and in addition arranged meetings with Madoff for many investors to perform their own due diligence. Unfortunately, Mr. Merkin's due diligence, just like the detailed investigations performed by countless others, including regulators, was thwarted by the intricate, fraudulent scheme perpetrated by Madoff," Levander said. 

Michael Shapiro, an attorney with Carter Ledyard & Milburn who represents several of Madoff victims, said New York securities laws require don’t require the Attorney General to prove that Merkin knew that Madoff was operating a fraud.

Cuomo needs to prove only that Merkin’s marketing materials included “material misstatements.”

“They don’t have to prove any intent to defraud or deceive,” said Shapiro.

Shapiro, a former prosecutor, said it was “inevitable” that financial advisors who, knowingly or not, turned a blind eye to Madoff’s unorthodox operations while collecting tens of millions of dollars in fees “would be held to account.”

Merkin is already facing civil suits filed by investors, including New York University, who claim Merkin hid from them the fact that he was turning their money over to Madoff.