They’re gonna need a bigger checkbook.
The owners of the Mets were slammed yesterday with an amended lawsuit demanding they now fork over a cool $1 billion to settle claims they not only profited from Bernie Madoff’s massive Ponzi scheme but also fraudulently withdrew the principal they’d originally invested.
Madoff bankruptcy trustee Irving Picard’s latest legal lashing strongly suggests the Mets owners knew their ol’ buddy Bernie was a huge crook — but were willing to turn a blind eye to keep the cash coming that they needed to run their businesses.
“The amended complaint sheds more light on the deep dependency of the Sterling business organization [owners of the Mets] on the continuation of the Madoff fraud and certain knowledge of indicia of fraud by the Sterling partners,” David Sheehan, Picard’s legal counsel, said yesterday.
Picard’s original lawsuit against the Mets owners — who operate their baseball, real-estate and other businesses under the name Sterling Equities — asked for about $300 million that he said they netted in profits from investing with Madoff.
Picard’s amended suit, also filed in Manhattan federal bankruptcy court, asks for more than $700 million on top of that original demand.
The $700 million figure, Picard’s office said, is the amount of “alleged fraudulent transfers of principals received by the Sterling defendants during the six years prior” to December 2008 — when Madoff confessed his Manhattan investment company was a Ponzi scheme.
Under Picard’s theory, Mets owner Fred Wilpon, Wilpon’s brother-in-law and fellow co-owner Saul Katz, their relatives and their business entities were not entitled to withdraw the principal they had invested in Madoff’s firm because they had been aware of red flags that pointed to Madoff’s being a fraud.
Among those warning signs were the investment firm Merrill Lynch’s telling Katz that Madoff would not pass Merrill Lynch’s “due-diligence protocols.”
Picard also notes that the firm Ivy Asset Management had told Katz it had redeemed all of its Madoff investments years before because of concerns about him.
Picard’s new suit cites a $54 million interest- and cost-free bridge loan from Madoff to Sterling Equities related to the purchase of the Mets broadcasting rights from Cablevision.
Picard claims that transaction was documented by a single-page letter agreement that falsely described the loan as a purported “investment” by Madoff’s wife, Ruth.
In a joint statement, Wilpon and Katz said: “The amended complaint is the latest chapter in the work of fiction created by the trustee [Picard]. We will pursue a vigorous legal defense that will set the record straight and vindicate us.”
Sources said the Mets owners will file a countersuit against Picard as early as Monday that will claim that Sterling Equities lost about $700 million investing with Madoff — and that Picard is knowingly misusing evidence to draw false conclusions and to “coerce a settlement.”
The cash-starved Mets are seeking an investor to purchase a minority share of the team and thus relieve the significant financial pressure the owners have been laboring under since Madoff’s scheme was exposed.
Hardball
Madoff trustee Irving Picard is suing the Mets owners for $1 billion — including $300 million in alleged profits and $700 million they allegedly invested with Madoff and withdrew.
Picard is demanding:
$195M from Jeff Wilpon, Mets co-owner, COO
$168M from Mets CEO Fred Wilpon
$154M from Mets board member David Katz
$120M from Mets President Saul Katz
$434M in total from Wilpon family members
$357M in total from Katz family members
Additional reporting by Mark DeCambre