SBD/February 21, 2011/Franchises

Mets Owners Over The Years Offered Select People Chance To Invest With Madoff

Katz (l), Wilpon offered others a chance to invest with Bernie Madoff
Mets Owner Fred Wilpon and President Saul Katz over the years offered "select people" an opportunity to invest with Bernie Madoff, according to a front-page piece by the N.Y. TIMES' Serge Kovaleski, who writes under the header, "Mets' Owners Guarded An Investment Pipeline." Former CNN host Larry King was among those chosen for the "strange and unique investment opportunity." But to be among those referred by Wilpon and Katz, "one had to agree to odd and puzzling terms that restricted direct contact with or questioning" of Madoff. Sterling Equities, the family company that owns the Mets, "would administer all the referred accounts and handle the transactions between the investors and Mr. Madoff's firm." Those invited would not send money to Madoff. Instead, it would be "filtered through the Sterling partner" and Mets BOD member Arthur Friedman, a "certified public accountant with a law degree who served as the liaison to Mr. Madoff’s operation." By the time Madoff was arrested in December '08, Friedman "had managed 178 Madoff accounts opened for friends and close business acquaintances of the Sterling partners, and for some Sterling employees." He also "administered 305 other Madoff accounts set up by Sterling partners for themselves, their families, trusts and Sterling-related entities." Account holders "were never to speak directly with Mr. Madoff or anyone at his business, Bernard L. Madoff Investment Securities," as "all communications regarding any of the accounts had to go through Sterling." Clients "would receive monthly paper statements from Mr. Madoff, though the year-end tax statements were sent from Sterling." Wilpon and Katz "clearly cherished and cultivated their lucrative relationship" with Madoff, as they "would allow investors to profit from his operation without fully understanding or having direct access to it." Court documents show that Sterling partners "told their lenders and their employees ... that his average returns were an impressive 18 percent or so and that they consistently outperformed the market" (N.Y. TIMES, 2/21).

HIGH DEMAND: Allen & Co. Managing Dir Steve Greenberg, who was "hired by the Mets owners to assist in the sale of a minority stake in the team," said that he is "surprised by the high level of interest in the club." Greenberg said that he "has been contacted by dozens of potential suitors, including 'a couple of dozen very serious groups' that have expressed interest in buying 20%-to-25% of the Mets." He noted that he "could not identify potential candidates." Greenberg said that it is "difficult to predict how long it will take to find a suitable partner for Wilpon." He "described the process for finding partners for the Wilpons this way: he fields the initial calls from prospective investors, determines if they are serious candidates and then directs them to Major League Baseball to be vetted by MLB officials." MLB officials "make sure the candidates have the financial resources to purchase the interest in the team and conduct background checks" (N.Y. DAILY NEWS, 2/19).
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