SBD/March 19, 2012/Franchises

Mets Owners Reach Settlement With Madoff Trustee Picard For $162M

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Wilpon and Katz will personally guarantee up to $29M of the settlement
Mets co-Owners Fred Wilpon and Saul Katz today “reached a settlement in which they will pay $162 million to resolve litigation” with Irving Picard, the trustee in the Bernard Madoff fraud case, according to Chad Bray of the WALL STREET JOURNAL. Picard had sued Wilpon and Katz as well as their families and business associates “for more than $300 million they invested” with Madoff. As part of the settlement announced in Manhattan federal court, the Mets owners “won't have to make a payment for three years.” They will instead “surrender their claims against the bankruptcy estate.” After three years, the Mets owners will “make payments to the estate to cover any amounts not resolved by their claims.” Wilpon and Katz will “personally guarantee up to $29 million of the settlement.” Sources said that the Mets owners “couldn't afford to repay the $300 million in principal invested and later withdrawn that Mr. Picard is additionally seeking.” A loss for Picard “could have been a blow to his reputation and provide a road map for defendants in other lawsuits” (WSJ.com, 3/19). On Long Island, Baumbach & DeStefano note Picard, who “has so far recovered $9 billion for Madoff's swindled investors, wanted to claw back money the Wilpon group originally invested with Madoff, claiming it ignored red flags about the Ponzi scheme.” But Wilpon's group said that they “were also victims.” As part of the settlement, both sides “agreed not to disparage each other” (NEWSDAY.com, 3/19). The jury selection “was set to begin” today in the civil trial, and had been “expected to feature more than two dozen witnesses, including Sandy Koufax” (NYPOST.com, 3/19). Former New York Gov. Mario Cuomo, who had served as a mediator between the two sides, said, “Am I surprised that (a settlement) happened? I would have been crushed if it hadn’t happened” (SportsNet N.Y., 3/19).

WILPON ADDRESSES THE MEDIA
: Wilpon today told reporters outside the courthouse, “As we’ve said from the very beginning when this lawsuit started, we are not willfully blind. We never were. We acted in good faith and we’re very pleased that this settlement bears that out. That’s very important to us.” Wilpon said he “definitely” feels his reputation has been cleared. After the impromptu press conference, SportsNet N.Y.'s Jonas Schwartz said a good reputation "was so important” for Wilpon and Katz to reclaim. Kallas said “it was important to their integrity, to their reputation and ... since the $162 million relates directly to the lost profits, it has nothing to do with the $303 million trial that was going to start today." Wilpon, Katz and their lawyers “will point out the trustee got zero" for the "willful blindness" claim. Schwartz: "In their minds -- and I think correctly -- that’s a big win for them, their character and their reputations” (SportsNet N.Y., 3/19). ESPN N.Y.’s Adam Rubin writes it is “unlikely the Wilpons would have settled unless they felt they could withstand that financial obligation without jeopardizing their ownership of the team.” Still, the Wilpons “are not out of the woods yet as owners.” It is going to “still be the Mets on austerity for a while,” and that means the Wilpons “will be utterly dependent upon fan attendance revenue in order to maintain ownership” (ESPNNY.com, 3/19).
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