A judge refused to dismiss a lawsuit against the New York Mets' owners on Monday, and a trial will be held on March 19. The judge said the Mets' owners owe $83 million and could be liable for hundreds of millions more.
Sterling Equities -- which also controls the Mets -- is being sued under the premise that the Mets' owners saw warnings of Bernie Madoff's Ponzi scheme, but chose to look the other way because the scheme fed their wealth.
If a jury finds that the Mets' owners, Fred Wilpon and Saul Katz, ignored blaring caution signals so they could continue to reap the benefits of Madoff's scheme, Wilpon and Katz could be ordered to pay up to $300 million.
Even while refusing to dismiss the lawsuit, the presiding judge, Jed S. Rakoff, said he was "skeptical" the trustee, Irving H. Picard, could prove that the Mets' owners knowingly ignored signs of Madoff's scheme.
The owners of the New York Mets have fired a high, hard fastball at Irving Picard, the trustee recovering money for victims of Bernard Madoff’s Ponzi scheme, calling his lawsuit against Mets ownership a “work of fiction.”
Picard is seeking $1 billion from the Mets owners, Fred and Jeff Wilpon and Saul Katz, alleging that they knew, or should have known, that Madoff was operating a Ponzi scheme. The Wilpons and Katz filed their response Sunday in U.S. Bankruptcy Court.
“After months of damaging leaks, false accusations and withholding of evidence, we can finally legally respond to the work of fiction created by the Trustee,” Fred Wilpon and his brother-in-law Katz said in a statement. “Let us be very clear: We did not know that Madoff was engaged in a fraud. There were no red flags and we received no warnings.”
Mario Cuomo, former New York governor, has been appointed to mediate the dispute.
In news that comes as the impossible to believe variety because of its source, convicted fraudster Bernard Madoff backed New York Mets owners -- and supposed friends -- stating that the three individuals were unaware of the Ponzi scheme he was orchestrating.
In his first interview from Federal Correctional Complex in Butner, N.C., where Madoff was sentenced to a 150-year prison term, Madoff told The New York Times: "They (Wilpons and Saul Katz) knew nothing. They knew nothing."
The trustee, Irving Picard, representing the victims who were swindled is suing the Wilpons' Sterling Equities, which also controls the Mets, for up to $1 billion since he believes that they were aware of what was going on. Because of the dire financial circumstances facing the franchise, the Wilpons recently came out stating that they were seeking a minority buyer in the team for up to 25 percent. The case is being mediated by former New York Governor Mario Cuomo.
In this interview with the Times, Madoff also said that the banks "had to know" what was going on: "They had to know," Madoff said. "But the attitude was sort of, ‘If you're doing something wrong, we don't want to know.' "
Check out the full three-page story in the Timeshere.
Former New York Governor Mario Cuomo has been appointed to mediate the dispute between the trustee for the victims of the Bernard Madoff’s Ponzi scheme and Fred Wilpon, Saul Katz and Sterling Equities, who are accused of profiting from Madoff’s actions. Cuomo was appointed on Thursday by a federal bankruptcy judge in Manhattan.
Irving Picard is the Madoff trustee. The lawsuit contends that Wilpon and Katz, used the profits from their investments with Mr. Madoff to establish personal fortunes, enrich dozens of family trusts and financially fuel their array of businesses, from the Mets to real estate to a cable sports network.
The lawsuit further contends the two men, their families and their businesses “made so much easy money from Madoff for so long” that despite the many warnings they “chose to simply look the other way.”
Just how much trouble are New York Mets owners Fred Wilpon and Saul Katz in over the whole Bernie Madoff Ponzi scheme fiasco? The Mets owners have insisted all along that they, like countless others, were victimized by Madoff. A lawsuit that was unsealed today contends otherwise.
Here is part of what the New York Times reported earlier today regarding Katz and Wilpon:
The lawsuit, unsealed in federal bankruptcy court in Manhattan on Friday, contends that the team’s owners, Fred Wilpon and Saul Katz, used the profits from their investments with Mr. Madoff to establish personal fortunes, enrich dozens of family trusts and financially fuel their array of businesses, from the Mets to real estate to a cable sports network.
"There are thousands of victims of Madoff’s massive fraud," states the lawsuit. "But Saul Katz is not one of them. Neither is Fred Wilpon."
At various times over the years, the suit says, as the men’s investments with Mr. Madoff only widened and deepened, they were blind to what it calls a litany of alarms: skepticism expressed by those in their inner circle, by fellow investors and by financial institutions.
Indeed, the lawsuit says the two men, their families and their businesses "made so much easy money from Madoff for so long" that despite the many warnings they "chose to simply look the other way."
Here is a little bit more:
The suit is seeking the return of what it calls $300 million in "fictitious profits," a net gain from some 200 accounts held by Mr. Wilpon, Mr. Katz, their real estate business and the Mets organization that over the years Mr. Wilpon and Mr. Katz used to build and sustain their multimillion-dollar empire.
The trustee is also seeking hundreds of millions beyond those "profits," in part because so much of the two men’s empire benefited from their Madoff profits. That total could reach beyond $1 billion, according to a lawyer involved in the case.
I am no lawyer, but none of this can be good for Wilpon, Katz or their future as owners of the Mets. The owners responded to the lawsuit today in a joint statement:
"The plain truth is that not one of the Sterling partners ever knew or suspected that Madoff ran a Ponzi scheme," Wilpon and Katz said in a joint statement. "Because the trustee has no evidence to support his claims even after a year-and-a-half review of over 700,000 pages of documents and many, many hours of depositions, he has created a claim that we 'knew or should have known' that Madoff was a fraud.
"Why should we 'have known' when the [Security Exchange Commission] and other government agencies that had oversight responsibilities did not know?"