Dec. 16 (Bloomberg) -- Yeshiva University lost about $110 million in investments tied to the Bernard Madoff scandal and has hired a lawyer to consider its options, a spokesman for the New York school said.

Most of the lost money was invested through hedge funds controlled by J. Ezra Merkin, who was a Yeshiva trustee and chairman of the investment committee, the spokesman, Bill Anderson, said today in a telephone interview. The losses left Yeshiva, a 122-year-old private school that combines academic and religious education, with an endowment of about $1.2 billion.

Merkin resigned from both university positions on Dec. 12, Anderson said. The spokesman declined to comment on an article published online today by the school newspaper, the Commentator, that said Yeshiva was considering legal action against Merkin. Merkin, head of New York-based Gabriel Capital Group and chairman of GMAC LLC in Detroit, didn’t return a call seeking comment.

“The university has retained legal counsel, but it is way too early to say what legal actions are being considered as far as any talk of suing Merkin,” Anderson said.

In a later statement, the university said it had retained the law firm Sullivan & Cromwell and the investment adviser Cambridge Associates to help review the school’s policies and procedures. Yeshiva is “financially strong,” according to the statement. The school said scholarships, financial aid and staff pensions won’t be affected by the by the investment losses.

“We will be working closely with our advisers over the coming weeks and months and I’m confident that we’ll emerge stronger than ever,” Richard M. Joel, the president of the university, said in the statement.

Madoff Resignation

Madoff, 70, resigned from the Yeshiva board last week and as chairman of Yeshiva’s Sy Syms School of Business. He was arrested Dec. 11 and charged with operating a Ponzi scheme that may have bilked investors of $50 billion. Madoff is free while arranging co-signers for a $10 million bail bond.

The school newspaper reported that Yeshiva’s Madoff-related losses may reach $140 million. Anderson said the university is still reviewing its holdings, “but the range as far as we could tell is probably much closer to $110 million.”

Madoff also managed money for private foundations affiliated with at least seven trustees at Yeshiva University, according to the most recent federal tax filings available. That includes three who reported having direct accounts with Madoff’s firm and four others who had invested in Merkin’s Ascot Partners.

Gottesman Fund

Financier David Gottesman, who once served as chairman of Yeshiva’s board, reported in a tax filing for the fiscal year ended Aug. 31, 2007, that the Washington-based Gottesman Fund earned $2.1 million trading large-cap stocks through a $20.4 million securities account at Madoff’s company. Madoff also helped the Gottesman Fund earn $35,294 that year by trading options.

Gottesman didn’t return telephone calls to his home and office seeking comment.

Warren Eisenberg, the co-chairman of Bed, Bath & Beyond Inc. in Union, New Jersey, reported that his private foundation generated $106,193 in trading profits through a $5.1 million account with Madoff in the fiscal year ended June 30, 2007.

Jesselson Profits

The New York-based Jesselson Foundation, run by Yeshiva trustee Michael Jesselson, earned about $1.5 million in profits through $234 million of trading in a Madoff account during the fiscal year ended April 30, 2007, according to its most recently available tax filing.

The Sapirstein-Stone-Weiss Foundation, run by the family of Morry Weiss, a Yeshiva trustee who is also chairman of Cleveland- based American Greetings Corp., listed a $2.4 million investment with Ascot and a $1.7 million stake in the “Bernie Madoff Fund” in its tax return for the year ended May 31, 2007. Other Yeshiva trustees who reported that their foundations had invested in Ascot included Emanuel Gruss, Ludwig Bravmann and Robert Beren.

Beren, who formerly ran an independent oil and gas company in Kansas, said his foundation invested in Ascot because of Merkin, whom he described as “one of the esteemed members of the investment community in New York.”

Weiss, Jesselson, Bravmann and Eisenberg didn’t return telephone calls seeking comment. Gruss, who said he is 87, declined to comment.

To contact the reporters on this story: Alex Nussbaum in New York anussbaum1@bloomberg.net; Miles Weiss in Washington at mweiss@bloomberg.net.

Last Updated: December 16, 2008 18:35 EST