The owners of the New York Mets will pay $162 million to satisfy litigation by the trustee seeking to recover money for those who were victimized by Bernard Madoff’s Ponzi scheme, it was announced Monday.
Fred Wilpon and Saul Katz, as well as their families and associates, agreed to the settlement with Irving Picard, the court-appointed trustee whose job is to recover as much of the lost money as possible. Madoff, an investment advisor and financier, pleaded guilty to fraud charges three years ago in connection with bilking investors of up to $20 billion over the years.
The Mets-related case was one of the high-profile legal battles that came out of the collapse of Madoff’s financial empire. The Mets owners had profited from investing with Madoff and had withdrawn funds from their Madoff accounts. Their lawyers had insisted that the owners had no idea that Madoff was conducting a Ponzi scheme, in essence paying lucrative profits to old investors with the cash flowing in from the new ones.
Picard -- technically known as the SIPA (Securities Investor Protection Act) trustee for the liquidation of BLMIS (Bernard L. Madoff Investment Securities LLC) -- had argued that the Mets owners had been “willfully blind” to Madoff’s criminal actions because they were making so much money. The Mets defendants illegitimately benefited from Madoff’s criminality, the trustee had argued.
In any case, the Mets owners reportedly couldn’t afford to repay the estimated $300 million in principal they had withdrawn from Madoff’s empire. They might have had to sell off more pieces of the team, whose financial prospects have followed its athletic path downhill. At some point, the owners were in danger of losing control of the team, still a premier franchise in the league though it is often considered second to the Yankees in the lucrative media market of New York.
Wilpon and Katz told reporters outside the Manhattan courthouse that the team's finances were secure.
“I am very, very pleased for ourselves and our families. This was really a team effort,” Wilpon told the Associated Press as he left. “We are not willfully blind.... We acted in good faith,” he said.
Both the Mets and the trustees office had been under the gun to reach a settlement.
U.S. District Judge Jed Rakoff had ruled on March 5 that the Mets defendants had to give up as much as $83 million in so-called fictitious profits from Madoff’s scheme, and a jury trial was set to begin over an additional $303 million. The main question in the trial was to have been whether the owners acted in bad faith when they withdrew money from Bernard L. Madoff Investment Securities, the brokerage Madoff used to run his swindle, according to the trustee.
Jury selection had been scheduled to begin Monday.
Madoff, 73, pleaded guilty in 2009 to orchestrating what prosecutors called the biggest Ponzi scheme in history. He’s serving a 150-year sentence in federal prison in North Carolina.
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