By Grant McCool
NEW YORK (Reuters) - Three hedge funds run by New York financier and philanthropist Ezra Merkin won dismissal of civil lawsuits accusing them of being part of swindler Bernard Madoff's massive fraud.
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In an order dated Friday and made public on Monday, U.S. District Judge Deborah Batts in Manhattan threw out lawsuits alleging fraud and misrepresentation by the Ascot Fund, the Gabriel Fund and the Ariel Fund.
"No misrepresentation was made when defendants relied on Madoff, as a third-party manager, to follow the investment strategies that aligned with the stated investment strategies of the funds," the judge's order said.
Batts also said allegations that the funds should have recognized "red flags" alerting them to Madoff's fraud "are unavailing given the opposing considerations of Madoff's immense reputation and deep deception."
Merkin had been general partner of Ascot and Gabriel. He was the sole shareholder and director of Gabriel, which in turn was the investment adviser to the Ariel Fund. Another defendant was BDO Seidman LLP, the auditor of the Ascot Fund.
The plaintiffs included New York Law School, Croscill Inc, a pension plan and others who sued in 2008 on behalf of investors in the three hedge funds.
Madoff, 73, was arrested in December 2008 and pleaded guilty in March 2009 to running a multibillion-dollar fraud. He is serving a 150-year prison term.
The case is In re: J. Ezra Merkin and BDO Seidman Securities Litigation, U.S. District Court for the Southern District of New York, No. 08-10922.
(Reporting by Grant McCool; editing by John Wallace)