The New York Mets’ owners must pay up to $83 million to the trustee recovering money for Bernard Madoff investors, a judge said Monday, though he expressed doubt that the trustee will succeed in proving at a trial this month that he’s entitled to as much as $300 million more.
U.S. District Judge Jed S. Rakoff issued his four-page ruling to narrow the subject of a March 19 trial in Manhattan that results from Trustee Irving Picard’s effort to force the club’s owners to pay as much as $1 billion into a fund established to repay thousands of investors cheated of billions of dollars during Madoff’s decades-long fraud.
Last year, Rakoff had ruled that the team’s owners wouldn’t owe more than $386 million to other Madoff investors. He made it clear then that they would likely owe up to $83 million but said the trustee must prove that the Mets’ owners “willfully blinded” themselves to Madoff’s fraud to get more.
His ruling Monday determined that the exact amount up to $83 million won’t be left to the jury but will be decided by him in a future written decision, likely after he hears more from lawyers on both sides.
Rakoff rejected a request by lawyers for the Mets’ owners to say Picard wasn’t entitled to more money, a ruling that would have eliminated the need for the trial.
But he said he “remains skeptical that the trustee can ultimately rebut the defendants’ showing of good faith.”
He said he was concerned that much of the evidence offered by both sides in court papers so far would not be admissible at trial.
“Conclusions are no substitute for facts, and too much of what the parties characterized as bombshells proved to be nothing but bombast,” he wrote.
Amanda Remus, a spokeswoman for Picard, said the trustee and his lawyers were aware of Rakoff’s order and were reviewing it.
Sterling Partners, a business entity that includes the Mets’ owners, said in a statement: “We are preparing for trial. We look forward to demonstrating that we were not willfully blind to the Madoff fraud.”
The trustee previously sued the Mets’ owners, saying they had to know Madoff was acting illegally. Lawyers for the Mets’ owners have repeatedly said that their clients had no idea Madoff wasn’t investing their money as he said he was.
Nearly 5,000 investors were deceived in the fraud by the former NASDAQ chairman, who told them their $20 billion investment had grown to $68 billion by November 2008. Weeks later, he revealed his fraud, confessing that only several hundred million dollars were left.
In his lawsuit, Picard said the Mets’ owners received $83.3 million in fictitious profits and $301 million in principal in the two years before a bankruptcy filing was made regarding the Madoff assets.
Rakoff’s rulings limiting what Picard can collect have been encouraging to the Mets’ co-owners Fred Wilpon and Saul Katz, who have said they were victims of Madoff’s fraud. The Mets announced last year that they were considering selling up to 25 percent of the franchise because of “uncertainty” caused by the lawsuit. Despite the upcoming trial, the tension surrounding the team over the Madoff issue seems to have relaxed.
Wilpon said at an appearance in Port St Lucie, Fla., last week that the Mets’ owners plan to keep the franchise “for a very long time.”
He cited a slashed payroll and an encouraging outlook in the courts.
“When it started, there was a really big number out there and now — I’m not minimizing — but it’s a different number,” Wilpon said.
Madoff is serving a 150-year prison sentence in North Carolina for his multibillion-dollar Ponzi scheme.
Associated Press writer Ronald Blum contributed to this report from Clearwater, Fla.