NEW YORK (Reuters) - Two investors failed in their private bids to recover more than $10 million from fund manager J. Ezra Merkin for money lost in Bernard Madoff's Ponzi scheme, court documents showed on Wednesday.
Last month, Merkin agreed to pay $410 million to settle a lawsuit brought by New York state that accused Merkin of secretly steering client money to Madoff.
Madoff pleaded guilty in March 2009 to perpetrating the largest Ponzi scheme in U.S. history and is serving a 150-year prison sentence
U.S. citizen Joshua M. Berman, who now lives in Switzerland, had his bid to recover more than $1.25 million from Merkin rejected, according to papers filed in New York state court Wednesday by Merkin lawyer Andrew Levander.
An arbitration panel denied all claims by Berman for his losses in Merkin's Ascot Partners fund, said the documents.
Berman was a partner at Kramer Levin Naftalis & Frankel LLP, and a former director of Tyco International Ltd.
Another investor, real estate developer Richard Born, a principal of BD Hotels, sought more than $10.5 million plus punitive damages based on losses in Merkin's Ascot Partners and Gabriel Capital funds as a result of Madoff's scheme.
However, a panel awarded only a fraction of his losses sought: $1 million, plus interest, according to papers filed in New York state court Wednesday.
David Bamberger, a lawyer who represents both investors, said he was reviewing his options.
Berman and Born could still recover losses from Irving Picard, the trustee seeking money for all Madoff victims. If Born does, he must reimburse Merkin, the arbitrators said.
Picard has recovered or entered into agreements to recover more than $9 billion, over half the $17.3 billion in principal estimated lost by Madoff customers who filed claims, according to the trustee's website.
Born and Berman may also be able to participate in the Attorney General's settlement. despite the arbitration, said Bamberger.
Investors may receive over 40 percent of their losses, New York Attorney General Eric Schneiderman's office said.
Reporting By Karen Freifeld; Editing by Michael Perry