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SBD/September 28, 2011/Franchises
Judge Awards Partial Victory In Mets Lawsuit, Limits Amount Madoff Trustee May Recover
Published September 28, 2011
FROM THE BEAT: SI.com's Michael McCann noted Wilpon and Katz "received decidedly mixed legal news" yesterday. Rakoff "refused to dismiss the most damaging counts: that Wilpon and Katz earned $295 million in fictitious profits through investing in a scheme that they knew to be too good to be true," and that they "should return their $700 million principal, as well." Unless the parties "agree on a settlement that would likely require Wilpon and Katz to pay tens of millions, if not hundreds of millions, a trial will probably be scheduled in the coming months." But Rakoff also ruled that Picard "can only go after the $700 million in principal if he proves that Wilpon and Katz were intentionally blind -- as opposed to unreasonably inattentive -- to Madoff's fraudulent actions." Picard, therefore, will "have to establish that Wilpon and Katz had substantial and informed suspicions," requiring him to show "considerable evidence pointing to what Wilpon and Katz actually thought" (SI.com, 9/27). The WALL STREET JOURNAL's Bray, Rothfeld & Futterman cite legal sources as saying that the high standard of proof "could be a very difficult burden for the trustee to meet" (WALL STREET JOURNAL, 9/28). In N.Y., Kaja Whitehouse notes Wilpon and Katz "came back from behind," but they are "far from safe." The "late-inning decision to throw out much of the case also significantly raises the bar for the bankruptcy trustee" (N.Y. POST, 9/28). ESPN N.Y.'s Adam Rubin noted the Mets Owners "received favorable news," but "are not fully off the hook" (ESPNNY.com, 9/27). In Newark, Andy McCullough wrote Wilpon and Katz "received a batch of good news" (NJ.com, 9/28).