(
)
(
)
Bernie Madoff trustee Irving Picard is crying foul over a federal court ruling, claiming the decision to toss much of his case against the owners of the Mets will also cut recovery for Madoff victims by nearly $6 billion.
Manhattan federal judge Jed Rakoff threw out nine of 11 counts brought by Picard against Mets owners Fred Wilpon and Saul Katz, and limited the trustee to clawing back money withdrawn in just the two years prior to Madoff coming clean.
The two-year limit caps the amount Picard can recover from the Mets at $386 million. Picard had been seeking $1 billion, including $300 million in alleged profits and $700 million in principal based on the life of their Madoff investment.
After a court hearing yesterday, a member of Picard’s legal team argued that it will also thwart his ability to collect money for thousands of Madoff victims.
Picard may even put a stop to the first round of checks that was set to be mailed tomorrow to burned investors, according to David Sheehan, one of the trustee’s attorneys.
Roughly 1,224 investors were on track to receive the checks in the aftermath of Madoff’s massive Ponzi scheme. The $272 million of payouts would have resulted in average checks of $222,000 per person.
“This has real ramifications,” Sheehan said to reporters after yesterday’s hearing in the wake of Rakoff’s ruling.
Sheehan indicated that the ruling could reduce total recovery in the case by between $3 billion and $6 billion. Another source close to Picard’s team said the actual amount is $5.9 billion.
Sheehan said the two-year limit “eviscerates” the trustee’s ability to seek bigger settlements in other cases as well and said the trustee will appeal the ruling.
In May, Picard announced he was on a roll in recouping money from “net winners” that would be distributed to “net losers” — or investors who put more into Madoff’s scheme than they took out.
At the time, he said he had collected close to $8 billion of the $17.3 billion he is aiming to distribute to victims.
Yesterday, Sheehan said Rakoff’s ruling likely will delay checks that were to be distributed tomorrow. Sheehan said he is hoping the payments will be made next week but “definitely by the end of the year.”
Rakoff’s ruling is a home run for the Mets, whose cash-strapped owners will see their liability capped to $386 million — and potentially a lot less.
The $386 million consists of roughly $84 million in alleged profits and $300 million in principal. However, Picard can only collect on the principal if he can prove the Mets were “willfully blind” to Madoff fraud.
What’s more, the Mets are expected to seek $160 million in losses, which could further reduce Picard’s ability to collect. Plus, Rakoff said the profit amount could potentially go even lower.
“The most the trustee can recover is $386 million,’’ Rakoff said, adding, “it may be much less than that, depending on how much is profit and how much is principal.’’