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$405 million Madoff payoff: Judge says victims' advocate 'slept on his rights'

A federal judge blocked the trustee seeking money for Bernard Madoff's victims from interfering with New York state's $410 million settlement with Ezra Merkin, a Wall Street hedge fund manager accused of steering client money to the swindler. The settlement calls for Merkin to pay $405 million to investors over three years, and $5 million to New York State to cover fees and costs.

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Bernard Madoff (center) enters the Manhattan federal courthouse in New York, March 2009.

Shannon Stapleton / Reuters / Files

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A federal judge blocked the trustee seeking money for Bernard Madoff's victims from interfering with New York state's $410 million settlement with Ezra Merkin, a Wall Street hedge fund manager accused of steering client money to the swindler.

Irving Picard, the trustee, had said the settlement with New York Attorney General Eric Schneiderman interfered with his exclusive right to recover money for people who invested with Madoff, by reducing the sums available for him to pursue.

But U.S. District Judge Jed Rakoff in Manhattan scolded Picard for having waited too long after the attorney general's office had first moved against Merkin to intervene.

The trustee, "having for more than three years issued empty threats to seek a halt to the attorney general's suit, has lost his right to complain," Rakoff wrote on Monday. "The trustee unreasonably and inexcusably slept on his rights."

Amanda Remus, a spokeswoman for Picard, said the trustee considers the decision "incorrect and contrary to law," and plans to appeal immediately.

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