Ex Merill Lynch executives are among victims of Madoff Ponzi scheme

On Thursday the wall Street Journal reported it was determined that top former Merrill Lynch executives, including two former CEOs, made investments into Bernard Madoff funds, and thus were among the victims of the investment scandal.

The paper stated that former chief executives Daniel Tully and David Komansky and former investment-banking chief Barry Friedberg personally invested in the funds, set up by former Merrill brokerage chief John Steffens.

Steffens' exposure to the scheme was tied to Ezra Merkin, a top Madoff investor who was one of three partners in Spring Mountain Capital LP, which managed nine of Steffens' hedge funds, the Journal said.

Daniel Tully said he invested with Steffens because "you back people you know and trust.”

While $35 million in Madoff investments amounted to just 4.4 percent of Spring Mountain's $800 million in hedge-fund fund-of-funds investments, Madoff represented as much as 7 percent of at least one fund, the Journal said.

It should also be highlighted that just ten days after the Madoff scandal Steffens announced he was closing down the Spring Mountain funds of hedge funds, some of which had positive returns.