Victims of Bernard Madoff's securities fraud may see some payback from one of the feeder fund managers that helped fuel Madoff's global investment crime spree. New York money manager J. Ezra Merkin is selling his prized art collection of Mark Rothko paintings and Alberto Giametti sculptures, according to a report in the
The Wall Street Journal.

Merkin has agreed to sell the art collection for $310 million to a mystery buyer as a result of negotiations with New York State Attorney General Andrew Cuomo, who sued Merkin and put a freeze on his assets earlier this year for lying to investors, charities and endowment funds about placing $2.4 billion of their assets with Madoff.

Cuomo's office announced the sale of Merkin's art on Tuesday, June. 30.

"This sale will yield, after liens, taxes, and fees, approximately $191 million that will be restrained and frozen in an escrow account pending resolution of the case against Mr. Merkin. This will preserve assets that, if our litigation is successful, will provide restitution to victims of Mr. Merkin's alleged fraud," stated Cuomo.

But where is the rest of the $310 million going? More than $100 million will go toward paying liens on the art (Merkin doesn’t own the art outright), as well as commissions on the sale of the art works, other fees and taxes, reported the WSJ.

The article speculates that the mystery buyer is actually the Rothko family since Merkin still owes the family more than half the purchase price and had promised to pay for the works over time. The family is reportedly worried that the art would get separated and entangled in the litigation facing Merkin, which could lower its value.

However, one blogger, Tzvee, who’s been following the saga of Merkin's actions, criticizes Merkin for the lack of transparency in the art sale. Just as Merkin placed $2.4 billion of investor funds into Madoff’s strategies, supposedly without informing investors, he did not identify who the art buyer is. It is the lack of transparency in Merkin's dealings with investors, that is at crux of Cuomo's lawsuit against Merkin. In fact, Cuomo contends that Merkin deceived endowment funds and individuals that he was steering the money to Madoff. In exchange for funneling money into Madoff’s empire, Merkin’s firm received for $470 million in management and incentive fees, Cuomo charges.

Here’s an excerpt from the Tzvee's blog.

"While the WSJ provides further details about the seizure and forced sale of J. Ezra Merkin's Rothko art, it raises questions in our mind about who is the secret buyer for this art,” wrote Tzvee, a Talmudic scholar, rabbi, professor and consultant at his blog.

And more, it focuses us again on secrecy - the primary sin committed by Merkin against his investors. Ezra secretly turned over his investor's monies to Bernie Madoff who promptly paid Ezra handsomely for helping him perpetuate his grand Ponzi scheme.

Merkin continues his secret dealings — now with the sale of the Rothkos — even after having been busted in about the most public fashion possible.

The identity of the buyer will come out soon. So what is the point of avoiding honesty and transparency?"