February 5, 2011 in Sports

Madoff lawsuit: Mets owners owe victims $300M

 

NEW YORK – The owners of the Mets turned a blind eye to Bernard Madoff’s massive fraud, reaping $300 million in false profits and using a large chunk to run the team, according to a lawsuit unsealed Friday.

The lawsuit claims the owners were so dependent on the disgraced financier’s returns that they “faced a severe and immediate liquidity crisis” when Madoff’s crimes were revealed in 2009.

The searing allegations were made by Irving Picard, the trustee appointed to recover funds for investors burned by Madoff’s scheme. The suit filed by Picard in federal bankruptcy court in Manhattan names Sterling Equities, along with its partners and family members, including Mets owner Fred Wilpon, team president Saul Katz and chief operating officer Jeff Wilpon, the owner’s son. Picard said Sterling withdrew more than $94 million in fictitious profits from Mets accounts with Madoff.

“Given Sterling’s dependency on Madoff, it comes as no surprise that the partners willfully turned a blind eye to every red flag of fraud before them,” Fernando A. Bohorquez Jr., a lawyer representing Picard, said Friday.

The suit had been filed under seal in December while the parties tried to work out a settlement. But lawyers told a judge this week that talks had collapsed and consented to having the complaint made public.

Its opening salvo: “There are thousands of victims of Madoff’s massive Ponzi scheme. But Saul Katz is not one of them. Neither is Fred Wilpon.”

The complaint alleges the partnership “received approximately $300 million in fictitious profits” from hundreds of accounts opened with Madoff’s firm. Of that, it says, $90 million of “other people’s money” were withdrawn to cover day-to-day operations of the team, nicknamed The Amazin’ Mets.

Wilpon and Katz fired back Friday with a statement calling the suit “an outrageous strong-arm effort to force a settlement by threatening to ruin our reputations and businesses we built for over 50 years.”

The pair called the accusations “abusive, unfair and untrue,” insisting they were victims of the fraud.

“We should not be made victims twice over – the first time by Madoff and again by the trustee,” they wrote.

The lawsuit said Wilpon and Katz had meetings with Madoff in his office at least once a year, a privilege few investors enjoyed, and Katz at times spoke directly with Madoff at least once a day.

It also said Wilpon and Katz maintained investments in Madoff accounts, even though Ivy Asset Management expressed concern in 2002 and the Sterling Stamos hedge fund warned repeatedly Madoff was “too good to be true.” The suit said a Sterling consultant advised Katz something was amiss in 2003.


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