The New York Mets owners will pay $162 million to settle a $303 million lawsuit by the liquidator of Bernard Madoff’s firm, just before they were due to go to trial for allegedly ignoring the fraud.
Fred Wilpon, Saul Katz and related defendants reached the settlement with the liquidator, trustee Irving Picard, on March 16, U.S. District Judge Jed Rakoff in Manhattan said today. The settlement has to be approved by a bankruptcy court judge, Rakoff said. The Mets owners will pay the money over a period of five years, Rakoff said.
Rakoff ruled on March 5 that the Mets defendants must give up as much as $83 million in so-called fictitious profits from Madoff’s Ponzi scheme and face a jury trial over an additional $303 million. The main question for the trial was to have been whether the owners acted in bad faith when they withdrew money from Bernard L. Madoff Investment Securities, the brokerage Madoff used to run his swindle.
“The SIPA Trustee believes that this settlement represents the best possible outcome for BLMIS Customers with allowed claims, as it provides for the recovery of 100 percent of the $162 million in fictitious profits for the six-year period,” said Picard’s lawyer, David Sheehan, in a press release. “We believe that this is a fair and just settlement. At the same time, the SIPA Trustee has withdrawn all willful blindness claims against any Sterling party.”
SIPC Approval
The settlement has been approved by the Securities Investor Protection Corp., which selected Picard as trustee, Sheehan said.
The press release from Picard thanked former New York Governor Mario Cuomo, who was appointed by the bankruptcy court to mediate between Picard and the Mets owners.
The trustee “also thanks the Wilpon and Katz families and the other Sterling Partners for setting a positive example by returning 100 percent of the six-year fictitious profits to the Customer Fund,” according to the statement.
The Mets owners opposed a jury trial and tried unsuccessfully to get the remaining claims brought by Picard dismissed after Rakoff cut them back to $386 million from $1 billion.
Picard’s lawyers had said they were confident a jury would find the Major League Baseball club’s owners deliberately ignored the fraud because it benefited their businesses, ranging from the team to real estate.
The Ponzi scheme cost investors an estimated $20 billion in principal, according to Picard.
Madoff, 73, pleaded guilty in 2009 to orchestrating what prosecutors called the biggest Ponzi scheme in history. He’s serving a 150-year sentence in federal prison in North Carolina. Picard and his law firm, Baker & Hostetler LLP, have charged about $273 million in fees for liquidating the Madoff firm since it collapsed in December 2008.
The case is Picard v. Katz, 11-cv-03605, U.S. District Court, Southern District of New York (Manhattan).