NEW YORK (Reuters) - A judge on Tuesday extended an order barring well-known hedge fund founder Ezra Merkin from shutting down funds that had invested with accused swindler Bernard Madoff or withdrawing money from them.

New York State Supreme Court Justice Richard Lowe issued the extension in a lawsuit brought on December 23 by New York University, which says it lost $24 million when funds run by Merkin invested money with Madoff without its consent.

Another judge issued the initial order on December 24 to stop Merkin from liquidating Ariel Fund Ltd, named in the lawsuit by the university along with Merkin and his Gabriel Capital Corp.

The initial order expired on Tuesday.

Madoff, an investment adviser, is accused of running a $50 billion securities fraud over many years.

"Until December 12, 2008, we had no knowledge that NYU's funds were instead being managed by Bernard Madoff," said an affidavit filed with the court by NYU chief investment officer MauriceMaertens.

"None of the documents we received throughout the years from Gabriel or Ariel ever stated that Mr. Madoff was managing NYU's assets."

Merkin's attorney, Andrew Levander, has said the court order will have no impact on plans announced on December 18 to wind down the Ariel fund.

Tuesday's order also allows for depositions to be taken from Merkin and an official from NYU, which calls itself the largest private university in the United States.

Merkin is chairman of GMAC, the finance business owned by General Motors Corp <GM.N> and private equity firm Cerberus Capital Management LP <CBS.UL>.

He has also been sued in U.S. District Court in Manhattan for his management of Ascot Partners LLP, a fund he founded that lost an estimated $1.8 billion with Madoff.

The 70-year-old Madoff was arrested on December 11 and charged with securities fraud. He is under house arrest in his Manhattan apartment on $10 million bail.

On Monday,U.S. prosecutors sought to jail him, saying he had mailed jewelry and other valuables to family and friends in violation of a court order freezing all his belongings. A judge has not yet issued a ruling on the government's request.

The case is New York University v. Ariel Fund Ltd 08- 08603803 in New York State Supreme Court (Manhattan)

(Reporting by Edith Honan and Grant McCool; editing by John Wallace and Ted Kerr)

Publié le 06 janvier 2009 Copyright © 2009 Reuters