The Incestuous Merkins Produce Ethically Murky Doings at the New York Times

Last Sunday's "Week in Review" section of the New York Times carried an Op-Ed piece on the Bernie Madoff saga by frequent Times contributor Daphne Merkin, carrying the somewhat opaque title "If Looks Could Steal."

The rather bizarre thrust of Ms. Merkin's musings about the Madoff affair came dangerously close to apportioning a strong measure of the blame for his crimes (fortunately we no longer need append the pro forma "alleged") on those whom Ms. Merkin felt were not correctly labeled his "victims."

"Given the demonization [sic] of Mr. Madoff and the intense sympathy for the plight of those smaller investors who trusted him, it is easy to forget that he actually did bring something to the table." And what, pray tell, did the writer think it was that Mr. Madoff "brought to the table"? In Ms. Merkin's eyes, it was "a sense of mishpocha, of being part of an extended family, but one you carefully chose rather than being arbitrarily born into." Clearly, these kinda-kinsmen did not choose their new mishpocha carefully enough.

What I took to be her slightly mad point was that Madoff's victims--or, as she would have it, his semi-willing co-conspirators--by voluntarily bringing their money to him, were hardly blameless for becoming unwitting victims of the world's largest and longest running Ponzi scheme.

Perhaps this sentence from the Op-Ed sums up her views most succinctly: "Indeed, what is lost amid the fury of some of those who handed their money over to him is that theirs was a voluntary -- nay, eager -- association."

Well, Daphne Merkin can think what she wishes, and her extraordinarily warped take on this tragedy would hardly merit reading past her third paragraph, let alone publishing a lengthy disputation. But the real story here is not one person's slant on the largest financial swindle in history. It is the decision of the New York Times to publish it at all.

Buried halfway through Ms. Merkin's plea for a fairer apportionment of the blame among the various--as she saw it--culprits was this odd little parenthetical disclaimer: "(I did not know Mr. Madoff nor did I invest with his firm, but have a sibling who did business with him.)" A sibling who did business with him? Not since John Ehrlichman coined the phrase "modified limited hang-out posture" has there been such a brazen attempt to get away with the barest sort of disclosure.

Back in 1986, a now-forgotten British cabinet secretary, referring to some politician who had narrowly managed to avoid outright lying, used the marvelously descriptive phrase "economical with the truth." Well, Ms. Merkin's "disclosure" was downright parsimonious with the truth.

I say this of course because she is the sister of J. Ezra Merkin, the second-largest institutional investor in Mr. Madoff's "funds." Our Newspaper of Record somehow thought it fitting and appropriate to allow the sister of a man who steered $2.4 billion of other people's money to Bernie to be prominently featured opining on What It All Means. J. Ezra Merkin was the second largest institutional investor with Madoff, having put the entirety of a $1.8 billion fund into Madoff Securities, wiping out its investors completely when the massive fraud was revealed.

Had her essay been from the unique vantage point of someone whose brother was deeply enmeshed in this financial disaster for 13,000 victims (I, unlike Ms. Merkin, use that word without reservation,) and had her "sibling's" identity been fully revealed to your readers, there might have been some justification for publishing her views, wacky as they are. But given its paltry excuse for full disclosure, and given the near certainty that only a small portion of Times readers would know that this major Madoff investor Merkin was the brother of the writer, I found its appearance in the Times simply astounding. (Is there a chance that the editors of the paper were unaware of the connection? I would say none.)

When the scandal first broke, the NYT included Mr. Merkin prominently among the devastated "victims" of these crimes in a December 13, 2008 story detailing the woes of investors small and large--like J. Ezra:
"Mr. Merkin, a prominent philanthropist and the founder of several hedge funds, including one called Ascot Partners, jolted his clients on Thursday with a letter announcing that "substantially all" of that fund's $1.8 billion in assets were invested with Mr. Madoff."

However, little more than a month later, the arc of the story had shifted markedly, and the Times was reporting growing suspicions that Merkin was hardly a blameless victim of Madoff:

"But not everyone sees him as a victim. The New York attorney general, Andrew M. Cuomo, has issued subpoenas in an effort to determine whether Mr. Merkin had defrauded universities and charities when he invested their money with Mr. Madoff..." It went on to state that Cuomo's "office is seeking information from Mr. Merkin, the three investment funds that he operated and 15 nonprofit institutions that gave him money to manage. Many of the institutions are now suing Mr. Merkin, claiming that they lost millions of dollars when he had invested money with Mr. Madoff without telling them." I have supplied the italics, as the fact that Mr. Merkin was richly rewarded for simply handing over his investors' money to Madoff, and that he concealed this fact for years, meets at least my test for that lovely legal phrase, res ipsa loquitur.

Toward the bottom of January's report was this salient fact: "Mr. Merkin collected over $40 million a year in fees from them [the Madoff funds] to support his lavish lifestyle." It went on to list New York University, Tufts University, Bard College and New York Law School as among the many charitable institutions whose funds Mr. Merkin had directed to Bernie. The granddaddy of all the defrauded non-profits was Yeshiva University where, according to the Times, "Mr. Merkin was a trustee and headed the investment committee. Yeshiva lost $110 million of the money invested with him. "

My reaction to the appearance of Daphne Merkin's quasi-apologia for Bernard Madoff (and, by implication, her brother) was to immediately write a letter to the Editor, carefully staying within the paper's imposed 150-word limit. I made as many of the points above as space permitted, opening with this thought: "I read Daphne Merkin's Op-ed in which she bizarrely describes the Bernard Madoff disaster as 'shot through with ambiguity.' Really? I see none."

When several days passed with no letter--mine or anyone else's--appearing on this subject, I then wrote to the Times' Public Editor, Clark Hoyt, reproducing my letter to the paper, and providing additional supporting facts for my amazement at the paper's decision to run the piece at all--with or without proper disclosure.

Mr. Hoyt promptly responded: "I agree with you that the disclosure that Ms. Merkin's unnamed sibling 'did business' with Bernard Madoff was completely inadequate." However, he added, that a conversation with Editorial Page Editor Andrew Rosenthal yielded only this: "Mr. Rosenthal does not contemplate an editor's note." With what seemed a sense of chagrin, Mr. Hoyt concluded, "I am considering what I want to do about this." Mr. Hoyt reminded me that, while he speaks to the Times, he does not speak for the Times.

I think Mr. Rosenthal's attitude can only be described as brazen. But I decided to wait until today's paper appeared, to see if Mr. Hoyt decided to take up the cudgels. He had not. Instead, readers of his column this Sunday were treated to a bland discussion about the vexatious problem of anonymous sources that placed most of the blame for this blight on the sources.

That the New York Times would make such an editorial decision is a stunning indication of the state of their editorial judgment. That they would pass up several opportunities to own up to this flagrant error in journalistic ethics adds outright cowardice and contempt for their readers to this crime.