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, 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?"