Cayman bank, directors named in NYU’s law suit

(CNS): Fortis Bank (Cayman) Ltd,  Fortis Prime Fund Solutions ,the managing director of dms management  Don M. Seymour (left) and dms director Aldo Ghisletta have all been named in a law suit filed by New York University in the Supreme Court of the State of New York. The university is seeking damages from Gabriel Capital Corporation and J. Ezra Merkin who managed the education institution’s fund and which it claims in violation of duties owed to NYU turned over a substantial sum of the fund to Bernard L. Madoff. According to legal documents NYU’s money was invested in Ariel Fund Limited which was incorporated in the Cayman Islands.

Fortis Bank is cited as a shareholder of Ariel, Fortis Fund Services serves as Ariel’s registrar and both Seymour and Ghisletta as directors.

The university is claiming damages against the parties listed on the suit as well as an order restraining the continued dissipation of Ariel funds and NYU’s interest and the appointment of a receiver, in connection with its investment through its endowment fund in Ariel Fund Limited.

The law suit states: “Unbeknownst to NYU, and in breach of agreements made by and among Ariel, Gabriel Capital Corporation (“Gabriel”) and J. Ezra Merkin (“Merkin”), and in violation of duties owed to NYU and Ariel, a substantial portion of Ariel assets were turned over to Bernard L. Madoff (“Madoff”), converted and lost, as part of a massive “Ponzi scheme.” Defendants Gabriel and Merkin through their gross negligence, recklessness, misrepresentations, and self-dealing, aided and abetted Madoff’s conversion of Ariel assets and induced NYU to retain its interest in Ariel, and proximately caused losses to Ariel and NYU. Ariel continues to report obligations to Gabriel (and Merkin) of $323 million as “deferred incentive fees,” for compensation based upon a percentage of illusory assets (and profits) transferred to Madoff. Based upon the wrongdoing alleged herein, this debt should be set aside and the “Advisory Agreements” pursuant to which fees were paid and deferred should be rescinded.”

The document sets out the details of NYU’s claim and how it became involved with Merkin, the establishment of Ariel and the allegation that money was given to Madoff against the express wishes of the university and that the fund mangers had then tried to conceal the fact that money had been given to Madoff. The college alleges the managers were reckless, breached their contract and had committed fraud as well as a number of other violations.

“Upon information and belief, Merkin simply turned over these assets to Madoff for management, without performing any due diligence or monitoring of the funds invested. As a result of the largest “Ponzi scheme” in history, these monies have been stolen. Gabriel and Merkin caused these assets to be transferred to Madoff despite numerous “red flags” warning of the dangers and imprudence of investing with Madoff,” the suit states.