Hedge Fund Peers Come to Merkin's Defense

Two contemporaries rushed to the defense of hedge fund manager Ezra Merkin, who is reportedly being investigated by New York Attorney General Andrew Cuomo after his investors lost billions of dollars linked to disgraced money manager Bernard Madoff.

William Ackman, who manages Pershing Square Capital, and Michael Steinhardt of Steinhardt, Fine, Berkowitz & Co. both called Merkin, a partner at hedge funds Cerberus Capital, Gabriel Capital and Ascott Partners, an "honest" man at a panel discussion of Madoff Thursday night at the Yivo Institute for Jewish Research.

"I've known him for 15 years," Ackman said. "I think he's an honest person, an intelligent person, an interesting person, a smart investor. People don't want to hear that because if you invested with Ascot you lost all your money."

Merkin has come under fire in recent weeks, after getting sued by New York University over $24 million in losses tied to Madoff, the disgraced New York money manager accused by authorities to have been running a $50 billion Ponzi scheme.

The controversy forced Merkin to resign earlier this month from his post as chairman of General Motors (GM) financing affiliate GMAC , of which Cerberus is a majority partner.

(Photo gallery: The Madoff Mess )

Real estate and media mogul Mort Zuckerman, chairman of Boston Properties (BXP) and publisher of the New York Daily News and U.S. News and World Report, was in no mood to pardon Merkin, who he called an "enabler" of Madoff. A charitable trust overseen by Zuckerman lost $30 million in investments through Ascot.