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SBD/February 7, 2011/Franchises
Madoff Trustee Irving Picard Seeks More Than $300M From Mets Owners
Published February 7, 2011
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IGNORING THE WARNING SIGNS: Picard claims that the Chief Investment Officer for Sterling Stamos, a hedge fund independent of Madoff in which Fred Wilpon and Katz invested, said that he "repeatedly warned the men and their families" about Madoff. Picard also alleges that Merrill Lynch, which "acquired 50 percent of Sterling Stamos in 2007, had a prohibition on investing with Mr. Madoff and told Mr. Katz that Mr. Madoff’s operations would not meet its standards." But Picard indicated that Wilpon and Katz "kept investing with Mr. Madoff, in what the lawsuit calls a 'cycle of dependency.'" The lawsuit claims that in '02, when Wilpon and Katz "assumed full ownership of the Mets, they offered Mr. Madoff a piece of the club," which he declined (N.Y. TIMES, 2/5).
THEIR SIDE OF THE STORY: Sterling Equities officials fired back Friday with a strongly worded statement of their own, insisting once again they had no knowledge of Madoff's ongoing fraud and accusing Picard of attempting to "strong-arm" a settlement and trash their reputations and business interests. "This is a flagrant abuse of the Trustee's authority and we will not succumb to his pressure," the statement from Fred Wilpon and Katz read in part. "The conclusions in the complaint are not supported by the facts. While they may make for good headlines, they are abusive, unfair and untrue. We categorically reject them. We should not be made victims twice over -- the first time by Madoff, and again by the Trustee's actions. … The Trustee also alleges that we were blinded to Madoff's crimes because our businesses 'depended' on the returns. That is complete nonsense." Lawyers for Sterling Equities additionally said that the Madoff accounts included only those that succeeded and omitted those that lost money. Attorneys for the Wilpons and Katz said, "The Sterling partners had over $500 million in Madoff accounts at the time of his failure -- some put in only days before -- and all of it lost. … Contrary to what the Trustee asserts, the returns on the Sterling-related brokerage accounts were not 'staggering,' 'easy money,' or ‘too good to be true.’ The $300 million in profit alleged in the complaint, even if accurate, would not be 'staggering' or 'extraordinary' when viewed in the context of principal invested over the past 25 years" (Fisher). The statement continued, "Why should we 'have known' when the (Security Exchange Commission) and other government agencies that had oversight responsibilities did not know?" (MLB.com, 2/4).