In the continuing effort to claw back funds stolen by Bernard Madoff, the owners of the New York Mets find themselves in the center of the maelstrom. First, they stand accused of knowingly investing in the crooked Ponzi scheme, and secondly of investing $12 million from Madoff’s wife, Ruth, in Sterling Equities, the investment vehicle of the Mets owners Saul Katz and Fred Wilpon.
Ruth Madoff
Trustee Picard named Ruth Madoff in his suit against Wilpon and Katz, and is now seeking to recover $14 million from Mrs. Madoff. The trustee names Sterling as a participant in the giant Ponzi scheme. Mrs. Madoff has already forfeited claims to more the $80 million in assets, but is not protected from Picard’s lawsuits – the original one in 2009 was for $44.8 million. The new lawsuit for $14 million is based solely on Mrs. Madoff’s Sterling investment. Mrs. Madoff must respond to Picard’s suit by March 31.
Mets Owners
Meanwhile, the Mets yesterday issued a brief attacking the $1 billion claim against them lodged by Picard. They claim Picard is ignoring exculpatory evidence, and that they were unsophisticated investors [though presumably they could have afforded a sophisticated investment advisor].
"After months of leaks, false accusations and withholding of evidence, we can finally legally respond to the work of fiction created by the trustee," Wilpon and Katz said. "Let us be very clear: We did not know that Madoff was engaged in a fraud. There were no red flags."
To the contrary, Trustee Picard insists that Wilpon and Katz knew or should have known of Bernard Madoff’s fraudulent scheme. Picard in his suit cited emails from business partners of the Mets owners at the Sterling Stamos hedge fund that indicated both men had participated "notwithstanding our [Sterling’s] concerns" and "against our recommendations." However, Katz and Wilpon deny ever receiving warnings from Sterling Stamos, only positive recommendations.
Last Friday, Picard tripled the amount sought from Katz and Wilpon to over $1 billion, including $200 million from Wilpon’s charity. The Mets are looking for a minority owner to keep its finances steady in light of these new demands from Picard.
In a classic statement, Picard’s top lawyer David Sheehan said: "The Katz-Wilpon defendants are wrong on the facts and the law. The trustee will prevail."
© 2011 Hedge Fund Writer LLC
