Legal News

Madoff Trustee Fires More Heat Toward Mets Owners

By Dionne Searcey

In the match up between trustee Irving Picard and the Mets, Picard wound up today and threw another high, hard one at New York’s National League representative.

In an amended complaint, Picard (pictured) alleged Mets owners Fred Wilpon and Saul Katz knew Madoff was a fraud and then, after the rest of the world did too, they hatched a plan to shield their assets from recovery.

The allegations were part of a 381-page complaint in which court trustee Irving Picard outlined for the first time how dozens business controlled by Wilpon and Katz through closely held Sterling Equities and their family members collected so-called fictitious profits at a time when the principals either knew or should have known that Madoff's investment fund was a fraud.

"The amended complaint sheds more light on the deep dependency of the Sterling business organization on the continuation of the Madoff fraud and certain knowledge of indicia of fraud by the Sterling partners," said David J. Sheehan, counsel to the Trustee and a partner at Baker & Hostetler, the court-appointed counsel for the Trustee.

In a statement, Wilpon and Katz said the allegations were unfounded.

"The amended complaint is the latest chapter in the work of fiction created by the Trustee. We will pursue a vigorous legal defense that will set the record straight and vindicate us."

Among the allegations that Picard alleges show that Sterling knew Madoff's operation was fraudulent was a $54 million transaction tied to its purchase of the broadcast rights for the New York Mets from Cablevision.

Sterling, the complaint said, turned to Madoff to finance the transaction because it feared bank loans would take too long. Madoff and Sterling hatched a plan to make the loan look like it was an investment from Ruth Madoff, Madoff’s wife.

Madoff wired to Sterling on about May 26, 2004 the $54 million "which was comprised of other people's money," the complaint states.

The next day Sterling repaid the $54 million it had borrowed from Madoff and used money borrowed from banks to proceed with the buyout, the complaint states.

The complaint says Wilpon, Katz and Tepper "should have known that it was highly unusual for such a sizable transaction to be supported by only minimal documentation" and that it didn't "accurately reflect the true nature of the deal."

Full post as published by Law Blog - WSJ.com on March 18, 2011 (boomark / email).