He and his buddy Ezra Merkin used to share a laugh about it all the time.
Some new details came from a phone call Mr. Merkin recorded during the fall of 2005, between himself and Mr. Madoff. After a different Ponzi scheme came to light involving the Bayou Group, a hedge fund firm in Stamford, Conn., Mr. Merkin told Mr. Madoff that this would further stoke suspicions about his business.
“You know, I always tell people, as soon as there is a scam in the hedge fund industry, someone is going to call about Bernie. It’s guaranteed,” Mr. Merkin told Mr. Madoff, according to the lawsuit.
Perhaps luckily for the continuation of their friendship, Ezra didn't get into the details about what he was telling those people.
In 2003, a research company met with J. Ezra Merkin, a prominent Wall Street financier who had earned a fortune investing his clients’ money with Bernard L. Madoff.
During the meeting, according to a new court filing, Mr. Merkin admitted that he did not fully understand Mr. Madoff’s business and questioned its legitimacy. He warned the unnamed company never to “go long in a big way” with Mr. Madoff. He joked that “Charles Ponzi would lose out because it would be called the ‘Madoff scheme,’ ” according to notes from the meeting.
“Seems to be some probability even in Ezra’s mind that this could be a fraud,” a representative of the company concluded.