(RTTNews) - Former GMAC financial services chairman J. Ezra Merkin, has agreed to give up control of his investment funds after his link to the Bernard Madoff scandal placed him in the spotlight. Merkin’s ties to the man who perpetrated a $65 billion Ponzi scheme have placed him in hot water with New York State Attorney General Andrew Cuomo.

Madoff’s funds depended in part on so-called “feeder funds” that funneled investor deposits directly to Madoff. Merkin’s Ascot Partners was allegedly one such feeder fund, directing “substantially all” of its assets to Madoff.

Cuomo has accused Merkin of actively helping Madoff, knowingly feeding Madoff $2.4 billion to help the former financier’s ponzi scheme.

Merkin is not the only person of late to be targeted by the investigation into the Madoff scandal. According to the WSJ Monday, the U.S. attorney’s office is investigating at least eight investors and associates are under investigation, naming three of the reported targets as philanthropists Jeffry Picower, 67, and Stanley Chais, 82, and close Madoff friend Carl Shapiro, 96, a women’s clothing entrepreneur.

The new targets are being investigated for reportedly manipulating returns. No investors have been charged with a crime.

In March Madoff, 71, pleaded guilty to 11 felony charges, including operating a $65 billion Ponzi scheme, the largest scandal of its kind in history.

Madoff pleaded guilty before U.S. District Judge Denny Chin to securities fraud, investment adviser fraud, mail fraud, wire fraud, three counts of money laundering, false statements, perjury, false filings with the U.S. Securities and Exchange Commission, and theft from an employee benefit plan.

Madoff faces a statutory maximum sentence of 150 years in prison and is also subject to mandatory restitution and faces criminal fines up to twice the gross gain or loss derived from the offense.

His sentencing is scheduled for June 16th.

Madoff’s scheme shocked the financial world, revealing severe regulatory cracks within agencies like the SEC. He once a respected investment banker and former chairman of the Nasdaq stock market before being arrested by the FBI on December 11 on charges of securities fraud.

Since Madoff’s arrest, the SEC has ordered an internal inquiry into how Madoff’s actions had gone unnoticed despite several warnings going back to at least 1999.

Aside from thousands of investors feeling the pain of the scandal, apparently at least two major Madoff investors committed suicide upon learning that the retirement investment fund was a fraud.

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Posted in Categories: Economy, Releases, USA.

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