The trustee appointed to recoup losses for investors in Bernard Madoff's Ponzi scheme has dropped a $279 million claim against J. Ezra Merkin's Ariel and Gabriel funds. Irving Picard nixed the charge after determining that the funds weren't functioning as a "conduit for money," as he had originally suspected. Even with the reduced charge, Merkin's balance still stands at $564.4 million, which will mean seeking an increase in repayment from a third fund, Ascot. Ascot withdrew more than $500 million in fake profits from Madoff's firm from 1995 to 2008, according to the suit. Lawyers for Ariel and Gabriel say the funds' managers didn't know about Madoff's scheme, and also say they withdrew only 10 percent of their holdings.