Mets Used Madoff Money for Deferred Compensation, Picard Says
(Updates with excerpt from court filing in fourth paragraph.)
Feb. 10 (Bloomberg) -- The liquidator of Bernard Madoff’s firm said he is entitled to pursue a $386 million lawsuit against the New York Mets owners because they chose to be “willfully blind” to the fraud to maintain an income stream that was essential to their business plans.
U.S. District Judge Jed Rakoff last year threw out most of trustee Irving Picard’s $1 billion in claims against the Mets owners, leaving him to seek about $386 million. The judge said Picard must prove the defendants, including Sterling Equities Inc. partners Fred Wilpon and Saul Katz, were willfully blind to Madoff’s crimes if he wants to recoup more than $83 million of that amount.
Wilpon and Katz had a motive to ignore signs that Madoff was running a Ponzi scheme, Picard argued in a filing yesterday in U.S. District Court in Manhattan. The Mets owners were so hooked on money from Madoff that they used it in place of disability insurance for the team’s players, and for their deferred compensation plans, Picard said. By 2001, they were reading articles that questioned Madoff’s methods and had received “personal warnings” about the money manager, he said.
“The Mets relied on Madoff’s returns as a predictable source of income for a business -- professional baseball -- with an otherwise unpredictable revenue stream,” Picard said in yesterday’s filing.
Fictitious Profits
The Mets owners countered in a court filing yesterday that they should be able to keep $83 million in fictitious profits taken from Madoff’s Ponzi scheme in the two years before his 2008 arrest because the money was owed by the registered brokerage to its clients.
Wilpon and Katz have said they trusted their broker and never suspected him of any fraud, let alone a Ponzi scheme. Picard’s suit should be thrown out because he cannot prove his case, only make allegations, they said in a previous request to Rakoff to dismiss the case.
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