New York Attorney General Andrew Cuomo charged Merkin with civil fraud for steering many of his clients to invest with Madoff. According the the charges, Merkin steered $2.4 billion of his client’s funds to Madoff, all the while ignoring “glaring red flags” that should have told him the investments weren’t safe. For his part, Merkin earned $470 million in incentive and management fees.

“Merkin duped individual investors, non-profits, and charities into believing he was responsibly managing their investments, when in actuality he was dumping them into history’s largest Ponzi scheme,” Cuomo stated at a press conference.

Merkin, 55, has denied wrongdoing. He said he was “absolutely shocked” to learn about Madoff’s scheme. His lawyer, Andrew Levander, said he would “vigorously defend” his client against court action.

Merkin is already being sued by New York University and Mort Zuckerman over his role in the scheme.

Ezra Merkin ran both the Gabriel Capital and Ariel Fund, which have been shut down. Both are now said to have operated as “feeder funds” that solicited funds for Madoff in return for large fees. Cuomo alleged that Merkin presented himself to clients as an “investing guru” but was only a “master marketer.” Cuomo’s written statement that accompanied the charges went so far as to say that Merkin realized professional investors were questioning “Madoff’s uncommonly steady returns, there were fundamental questions about Madoff’s money management business that suggested fraud.”

Cuomo stated that Merkin had two articles that questioned Madoff’s investments in his files.

Levander said that Merkin had done his due diligence, and found nothing untoward about Madoff.

“Unfortunately, Mr. Merkin’s due diligence, just like the detailed investigations performed by countless others, including regulators, was thwarted by the intricate, fraudulent scheme perpetrated by Madoff,” he said.

Madoff, the former Chairman of NASDAQ, has been under house arrest since December 2008.

On Friday US District Judge Denny Chin invited victims to attend court this Thursday, when Madoff is expected to enter his “Guilty” plea.

It’s widely being speculated that Madoff is likely to enter into a “plea agreement” in order to minimize his legal damages. After his guilty plea, it’s expected that the District Attorney will hit the disgraced financier with even more charges.

“Madoff is about to enter his guilty plea,” SEC attorney Jacob Frenken said. “A criminal information is a consented-to criminal charge used to enter a guilty plea.”

Noel’s Greenwich Sentry fund invested $220 million with Madoff and his Fairfield Sentry fund invested $7.3 billion solely in Madoff, jeopardizing investors’ interests while collecting “millions of dollars in fees,” according to a complaint filed Dec. 19 in New York State Supreme Court in Manhattan.

Fairfield Greenwich Group founding partners Noel, Andres Piedrahita and Jeffrey Tucker are accused of breach of fiduciary duty, negligence and unjust enrichment, as are Brian Francouer and Amit Vijayvergiya of FG Bermuda, a Noel affiliate. The complaint was filed as a class-action, or group, lawsuit on behalf of investors.

“FG defendants failed to perform even a minimum level of due diligence regarding the activities of Madoff,” according to the complaint.

The net of victims of Madoff has been worsening since the legendary investor admitted to at least $50 billion of fraud when he was arrested by police on Dec. 11th. So far, institutions and investors worldwide have been emerging with billions lost.

The main contention is that Fairfield Greenwich, acting in its’ capacity as a hedge fund, didn’t do enough to make sure Madoff and his returns were legitimate. In a case such as this, there’s plenty of blame to go around as billions evaporate into thin air. Fairfield Greenwich was particularly active in recruiting more money to be invested in Madoff’s firm.

Banque Benedict Hentsch & Cie. SA, a company that merged with FG in September, is now canceling that agreement and returning money to investors. They say that $48 million may be lost.

“The management of the bank and its advisers are carefully following the development of the situation in order to undertake any further steps, particularly legal, judged necessary,” the company said in a statement.