The owners of the Mets will be forced to pay no more than $386 million to resolve claims by a trustee collecting money for investors who lost billions of dollars in Bernard Madoff’s fraud.
U.S. District Judge Jed Rakoff noted the figure in an order issued Wednesday, several hours prior to a hearing scheduled for lawyers in the case.
The figure slices more than $600 million off the $1 billion award requested by court-appointed trustee Irving Picard in a lawsuit that accused the team’s owners of turning a blind eye to the fraud perpetrated by the now-jailed financier. Rakoff tossed out most of the claims in a decision issued Tuesday.
Rakoff said the $386 million consists of $83.3 million in fictitious profits accumulated by the Mets’ owners in the two years before a bankruptcy court filing occurred. It also includes more than $300 million in principal that Picard maintains the Mets received during the two-year period.
In his written opinion Tuesday, the judge said Picard could only recover principal if he can prove that the Mets’ owners knew about the fraud. The lawsuit had claimed that the owners either knew or should have known that Madoff was operating a multi-decade fraud.
The 73-year-old is serving a 150-year prison sentence after pleading guilty to fraud charges. He revealed the multi-decade scheme in December 2008, shortly after telling investors their money was worth as much as $68 billion. In fact, there was only several hundred million dollars left of their roughly $20 billion investment.
Sterling Partners, a business entity that includes the Mets owners, said in a statement Tuesday that it was pleased that the judge had limited what Picard could claim to a two-year period.
Lawyers for Mets owners have repeatedly said that the defendants had no idea Madoff was not investing their money as he said he was.
Picard has filed more than 1,000 lawsuits seeking to recover billions of dollars lost by Madoff investors. Picard has argued that some investors, including the Mets’ owners, owe large sums of money to other investors because they withdrew enough that they came out hundreds of millions of dollars ahead, at the expense of the others.
The Mets’ finances have become a distraction for the team this year.
The club’s cash-strapped owners announced in May that they had agreed to sell a minority share to hedge fund manager David Einhorn for $200 million. But the deal fell through Sept. 1, and the Mets said they would seek to sell shares of up to $20 million to family members and other potential investors without risking the possibility of losing a controlling interest.