J. Ezra Merkin, his Gabriel Capital LP fund and Ariel Fund Ltd invested NYU's money with Madoff without telling investors or proper due diligence, according to a complaint filed on Wednesday in New York state court in Manhattan. NYU, which said it had 94 million dollars invested in Ariel, alleged Merkin made all the investment and executive decisions for the fund.

When Merkin "proposed investing the university's money with Mr. Madoff without telling us he had already done so, he was explicitly told this was not a proper investment vehicle", NYU spokesman John Beckman said in a statement. Merkin didn't "exercise reasonable judgment in investing NYU's money".

The claim adds NYU to a growing list of alleged victims of Madoff, including Liliane Bettencourt, the world's wealthiest woman and the daughter of L'Oreal SA founder Eugene Schueller; Spanish billionaire Alicia Koplowitz; U.S. filmmaker Steven Spielberg; Nobel laureate Elie Wiesel; and Yeshiva University.

Madoff, 70, was arrested on Dec. 11 at his Manhattan home after allegedly confessing to his sons that his business was a "giant Ponzi scheme" that may have cost investors 50 billion dollars, according to an FBI complaint. Madoff has been charged by federal prosecutors with one count of securities fraud and faces as much as 10 years in prison if convicted. Clients of Madoff had about 36 billion dollars with his firm, according to a Bloomberg tally that may include some double counting.

Since Madoff's arrest, the fallout from the alleged fraud continues to spread. New York-based money manager Thierry Magon de La Villehuchet, who may have lost 1.4 billion dollars of client funds invested with Madoff, was found dead in his Manhattan office on Dec. 23 in what police said was an apparent suicide.