Bernard Madoff’s bankruptcy trustee is going after some 40 entities controlled by the owners of the New York Mets and their families, claiming they received $300 million in “fictitious profits” stemming from the $65 billion Ponzi scheme perpetuated by the Rockaway native.
The lawsuit had been filed under seal in U.S. Bankruptcy Court, but the seal was lifted last week following a motion by The New York Times and NBC.
Aside from the $300 million, Madoff trustee Irving Picard also seeks to recover initial $700 million the Mets owners invested with Madoff, which could force the team to be sold.
The suit claims Sterling Equities, the company controlled by Mets co-owners Fred Wilpon and Saul Katz, should have known that profits they received from Madoff were ill-gotten.
But Sterling Equities, which owns the Mets, called the suit “an outrageous ‘strong arm’ effort to try to force a settlement by threatening to ruin our reputations and businesses which we have built for over 50 years.
“While [the allegations] 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 Mets owners announced Jan. 28 that they were seeking to sell a minority stake in the team due to “uncertainty” over Picard’s lawsuit.
“We thought Madoff was a friend of 25 years. This is why his betrayal was so painful,” Sterling Equities said. “Each of the Sterling partners and their families invested with Madoff in good faith right up to the day his crime was exposed. We were as shocked as the rest of the world when the money in our accounts vanished along with the billions he swindled from thousands of other innocent people.”
The suit claimed to show how Madoff, the Wilpons and Katz were closely linked, stating they were all involved in the same charities and that Madoff and his wife, Ruth, accompanied the Mets owners and their wives when they played an exhibition game in Japan a few years ago.
The suit claimed about one-third, or $94 million, in “fictitious profits” received by Sterling Equities and trusts tied to members of the Wilpon and Katz families from Madoff “supported Sterling’s professional baseball and sports media business and, specifically, the Mets.
“Upon information and belief, a significant amount of the $94 million Sterling received of other people’s money [from the Madoff scheme] went to fund the day-to-day operations of this Major League Baseball franchise,” the suit claimed.
The lawsuit alleged that since the owners of Sterling Enterprises and its related companies were seasoned investors, they should have been suspicious of the profits they were receiving from Madoff — who attended Far Rockaway High School — and duped investors out of some $65 billion.
“The Sterling Partners also knew or should have known that Madoff’s returns were too good to be true based on their access to sophisticated quantitative information showing that Madoff’s historical performance was almost impossible statistically,” the suit claimed.
But Sterling Equities said there was no way they could have known Madoff was running a Ponzi scheme.
“The plain truth is that not one of the Sterling partners ever knew or suspected Madoff ran a Ponzi scheme,” the company said in a statement. “Why should we ‘have known’ when the [Securities and Exchange Commission] and other government agencies that had oversight responsibilities did not know? In fact, the SEC reported that Madoff was above board and legitimate, even after it investigated him many times.”
The company also called Madoff trustee Irving Picard’s allegations that Sterling was blinded by the scheme because it depended on the returns “complete nonsense.”
“We have good, sound businesses that were successful years before we invested with Madoff, including both real estate and the New York Mets. Those businesses never depended on returns from Madoff.”
Reach reporter Howard Koplowitz by e-mail at firstname.lastname@example.org or by phone at 718-260-4573.
©2011 Community News Group
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