Saul Katz and Fred Wilpon (Jonathan Baskin)
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Mets owner Fred Wilpon was so addicted to the steady stream of profits gushing from his bulky Bernie Madoff account that he was routinely stuffing the cash into whatever team account needed a fix, court papers allege.
Disability payments for former star Darryl Strawberry instead of insurance? Check.
Deferred compensation for long-retired player Bobby Bonilla? Check.
Day-to-day expenses of the team? Check.
“When faced with cash crunches from week to week, the Mets routinely and confidently relied on future Madoff returns to bridge the gap,” the court papers, filed by the court-appointed trustee for the Madoff estate, Irving Picard, charged.
The trustee made his latest charges ahead of the scheduled March 19 trial against Wilpon and his partner, Saul Katz, in an attempt to wrest back $386 million in profits the Mets owners pocketed from Madoff’s Ponzi scheme.
Roughly $83 million of that total was withdrawn in the two years prior to Madoff’s December 2008 arrest. To get the rest, Picard has to prove Wilpon and Katz were “willfully blind” to the Madoff scam.
Picard’s laundry list of uses Wilpon and Katz employed for the Madoff cash is an attempt to show why they would need to turn a blind eye.
The more bitterly debated issue is whether the owners had reason to smell something was wrong with Madoff.
Picard, in his papers filed in Manhattan federal court, claims longtime hedge-fund expert and former Goldman Sachs exec Noreen Harrington shared her suspicions with Katz that a Madoff feeder fund run by Ezra Merkin didn’t pass the smell test but that they ignored her advice.
At a meeting in 2003 with Manhattan money manager Merkin, who invested all his clients’ cash with Madoff, Harrington determined that “Madoff’s returns did not jibe with legitimate trading activity and were either a fiction or the result of illegal front-running,” court papers allege.
In earlier legal testimony filed by the Met’s defense, Katz has said that he does not recall Harrington expressing worries about Madoff.
Katz and Wilpon have also maintained that Madoff was a respected money manager and investor, and that there was no reason to doubt his honesty.
Even federal regulators didn’t doubt his honesty at the time, they claim.
For months, Picard has been arguing that the Mets, who built their empire through savvy real-estate plays over a decades-long career, should have known about Madoff’s con but were too “hooked” on the easy money to speak out.
Beyond the money, Wilpon and Katz also shared a fairly friendly relationship with Madoff — a fact that critics also argue would have encouraged them to keep their flaps trapped.
Lawyers for Wilpon and Katz argue that the duo never knew that Madoff’s investment fund was a gigantic fiction and that it would have been “nonsensical” for them to risk their hard-earned reputation and money to keep Madoff’s Ponzi under wraps.
The cash-strapped Mets owners have asked a federal judge to dismiss the $386 million Madoff-related lawsuit hanging over their heads at a court hearing scheduled later this month in front of Judge Jed Rakoff.