The Mets are caught in a real squeeze play — one that could cost them up to $1 billion.
Talks to settle a lawsuit against the team’s cash-poor owners for allegedly profiting from Bernard Madoff’s massive Ponzi scheme collapsed yesterday, leaving the Amazin’s under even more pressure to sell a stake — if not the entire team.
The failure to cut a deal with the trustee empowered to claw back cash from those who profited from Madoff’s epic scheme also sets the stage for damning legal allegations against Mets majority owner Fred Wilpon and his family to become public as early as today.
LETTER TO THE JUDGE ASKING FOR LAWSUIT TO BE UNSEALED (PDF)
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And it means Wilpon — who’s already trying to unload up to a 25 percent stake in the team to raise desperately needed cash to pay off Madoff victims’ claims — stands to risk losing total control of the franchise by fighting the case in court instead of settling.
Wilpon, his fellow owner, partner and brother-in-law, Saul Katz, and their relatives were sued in Manhattan federal bankruptcy court in December by Irving Picard, the trustee assigned to recover money for those who lost money investing with Madoff, a longtime Wilpon friend.
Picard’s lawsuit was filed under seal to give the bankruptcy trustee and the Mets owners the ability to negotiate a settlement. But in a letter to federal bankruptcy Judge Burton Lifland yesterday, Picard’s lawyers wrote, “Settlement negotiations with [the Mets owners] have ended.”
A source who knows Wilpon said, “I’m sure Picard wants a big settlement now, and Fred just doesn’t have the money.
“This will devolve into a full sale of the team,” the source predicted.
Picard’s lawsuit accuses the Mets owners of profiting from Madoff’s scheme by pulling out $300 million in profits before the $65 billion scam collapsed in December 2008.
The suit, accord ing to sources, also claims that the own ers either knew or should have known that Madoff was a fraud — but turned a blind eye as they earned mas sive profits.
Because of those claims — and because of evidence that the Mets’ owners were financially savvy enough to have pulled money out from another Ponzi scheme after getting wise to it — Picard may be seeking punitive damages that could expose the owners to total damages of up to $1 billion.
That amount likely exceeds the Mets’ total value, pegged by Forbes at $858 million last year.
But a source familiar with the case said, “[The Mets] have got nothing to hide — and he’s [Picard] got nothing. There’s no smoking gun, there are no e-mails there are no letters, there’s no evidence whatsoever that there is a link between the Mets and the scheme.”
Additional reporting by Josh Kosman and Dan Martin