SBD/March 4, 2011/Franchises

Appeals Panel Casts Doubt That Mets Owners Have Right To Keep Madoff Profits

Mets owners continue to contend that they are victims of Madoff fraud
A federal appeals panel reviewing a compensation plan for former clients of Bernie Madoff Thursday "cast doubt on claims by the embattled owners of the Mets and other investors that they have a right to keep millions of dollars of fictitious profits," according to Tom Hays of the AP. Karen Wagner, a lawyer representing Sterling Equities, the company that runs the Mets, "argued that laws protecting investors say they're owed whatever amounts were reflected on investment statements in 2009 when Madoff's massive Ponzi scheme imploded." Wagner: "From the investors' perspective, the funds weren't fictitious. ... All the law says is that they were entitled to rely on the statements." Judge Pierre Leval referred to the figures as "figments of the imagination." Irving Picard, the trustee in the Madoff case, "has aggressively sought to recover funds through so-called clawback lawsuits," including one naming Mets Owners Fred and Jeff Wilpon and Saul Katz. The suit "seeks return of $300 million it says were phony profits, plus up to another $700 million as penalty for the defendants' alleged willful blindness to steady double-digit returns that defied down markets." The Mets owners "have steadfastly denied any wrongdoing, saying they were victims of the fraud." They "didn't attend Thursday's hearing, nor were they mentioned by name" (AP, 3/3). Former New York Gov. Mario Cuomo, the "mediator trying to broker a settlement" between Picard and the Mets owners, said Thursday that he has been "working with both sides on an almost daily basis." Cuomo was "reluctant to say if any progress had been made in bridging the gap" between the Mets owners and Picard, who is seeking up to $1B from them. Cuomo said that he "expected to have two more meetings in the next week" (N.Y. TIMES, 3/4).

END OF THE ROAD?'s Ken Rosenthal wrote, "While people inside and outside of baseball tell me that it's too early to rule out Fred Wilpon's chances of retaining control of the Mets, I find it increasingly difficult to believe that he will remain viable as owner. For the good of the team, the good of the game and maybe even the good of his family, Wilpon needs to get out. ... How long will it take for the partial sale and Madoff case to resolve? To what extent will Wilpon be damaged even if he achieves outcomes that he deems favorable? Will he ever fully recover?" Rosenthal added, "You hear plenty about the Mets' debt these days, but few know the true value of Wilpon's assets. ... If Wilpon's debts exceed his assets, then it's game over; he must sell" (, 3/3).
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