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SBD/March 21, 2011/Franchises
Mets Owners Accuse Madoff Trustee Of Making False Allegations
Published March 21, 2011
Mets co-Owners Fred Wilpon and Saul Katz "went on the legal offensive late Sunday, filing court papers that accused the trustee in the Bernard Madoff fraud case of making a host of false allegations, and unveiling their legal strategy to combat the trustee's effort to claw back over $1 billion in profits and investments from the Ponzi scheme," according to Anthony DeStefano of NEWSDAY. Wilpon and Katz said in a statement, "After months of damaging leaks, false accusations and withholding of evidence, we can finally legally respond to the work of fiction created by the trustee. Let us be very clear: We did not know that Madoff was engaged in a fraud." In court filings, the Wilpon family and their partners at Sterling Equities said that "under the law they can't be compelled to return the money because they weren't aware of the fraud." A Sterling legal memo reads, "A customer has no way of knowing what his broker is actually doing" (NEWSDAY, 3/21). The Mets owners charged that the trustee "had repeatedly ignored or misrepresented evidence that showed they had no good reason to have suspected Mr. Madoff was operating a fraud during their many years of investing with him." When Wilpon was asked in his deposition whether he understood how Madoff made money off his investment business, he responded, "Not in any kind of depth" (N.Y. TIMES, 3/21). In N.Y., Thompson, Vinton & O'Keeffe report lawyers for Wilpon and Katz "filed a motion to dismiss and a motion for summary judgment Sunday night in their first forceful shove back at litigation that has put their integrity at question." David Sheehan, counsel for Madoff trustee Irving Picard, responded last night, saying, "The Katz Wilpon defendants are wrong on the facts and the law" (N.Y. DAILY NEWS, 3/21).
DID PICARD OMIT EVIDENCE? In N.Y., Mark DeCambre reports the Mets' complaint "attempts to show that Picard intentionally omitted evidence that would have been 'overwhelmingly favorable to the Sterling Partners that are directly contrary to the evidence available before the complaint (by the trustee) was filed'" (N.Y. POST, 3/21). Sterling Equities "disputed Picard's contention that Peter Stamos, the head of the separate investing firm Sterling Stamos, told Sterling Equities that Madoff's returns were 'too good to be true.'" Sterling Equities "contends that Stamos testified the opposite" (Newark STAR-LEDGER, 3/21). ESPN N.Y.'s Adam Rubin reported the Mets' response to Picard's complaint "quotes from fund manager Peter Stamos' deposition in which, asked if he ever communicated to the Wilpon family it may be too good to be true, Stamos said: 'I can't ever recall using those words to describe Mr. Madoff.'" The response also indicated that Stamos "did not advise the Wilpons to avoid investing with Madoff," rather that Stamos "only recommended they diversify their investments and invest no more than 10 percent in one place." That "directly contradicts an email in the original complaint" (ESPNNY.com, 3/20). The WALL STREET JOURNAL's Michael Rothfeld notes the "back-and-forth legal action signals that settlement negotiations between the two sides, despite the aid of a court-appointed mediator, former New York Gov. Mario Cuomo, haven't gained traction" (WALL STREET JOURNAL, 3/21).
PICARD SEEKING MORE THAN $1B: ESPN N.Y.'s Rubin reported Picard "officially wants more than" $1B from the Mets owners. In an amended lawsuit filed Friday, Picard now officially seeks more than $700M in "alleged fraudulent transfers of principal." That is "in addition to $300 million in alleged fictitious profits." Picard "filed court papers Friday saying the cozy relationship between the Mets and the Madoff family was demonstrated with a 2004 bridge loan for $54 million that the family provided the team's owners." Picard said that the bridge loan was "documented by a single letter agreement that falsely described the loan as an 'investment' by Madoff's wife, Ruth, in the company that would later become the SNY network." But Mets Exec VP & General Counsel David Cohen said that the $54M, "representing funds the Sterling partners had invested with Madoff, was never used" (ESPNNY.com, 3/19). Wilpon and Katz said in a statement, "The amended complaint is the latest chapter in the work of fiction created by the Trustee" (Newark STAR-LEDGER, 3/19). In N.Y., Thompson & Vinton reported the new complaint "claims to 'shed more light' on the deep dependency of Sterling on its Madoff investments." However, a source close to the litigation said he "did not see anything new of consequence" in the document (N.Y. DAILY NEWS, 3/19).
SNY OFF THE TABLE: The WALL STREET JOURNAL's Futterman & Schechner cited sources as saying that Time Warner Cable and Comcast officials "would be unlikely to allow" the Mets owners to "sell part of their stake in the jointly owned" SportsNet N.Y. That stance "could complicate the team owners' efforts to sell a minority stake in the franchise to raise cash." One source added that "prospective investors in the Mets won't be provided with financial information about the team's cable network" (WALL STREET JOURNAL, 3/19). Meanwhile, in N.Y., Richard Sandomir reports "over the next week to 10 days, five to eight possible bidders for a minority stake in the Mets will take a first step to making an offer by examining the team's financial records" (N.Y. TIMES, 3/21).
BID GROUPS APPROVED TO LOOK AT METS' RECORDS
|Goldman Sachs Global Securities Division co-Head David Heller and Apollo Global Management President Marc Spilker|
|BTIG co-Founder Steve Starker and Marquis Jet co-Founder Kenny Dichter|
|1-800-Flowers Founder James McCann and SkyBridge Capital Managing Partner Anthony Scaramucci|
|Clarion Capital Partners Managing Partner Marc Utay and former YES Network Chair & CEO Leo Hindery|