Metro

Mets ‘ignored’ Madoff fraud: suit

The umpire wasn’t the only one who was blind.

For decades, the owners of the Mets ignored glaring evidence of Bernard Madoff’s epic Ponzi scheme so they could reap more than $300 million in profits off “other people’s money” to run their baseball team, cable sports network and real-estate em pire, a scathing law suit unsealed yester day charges.

The suit not only aims to recover the nearly $322 million in Madoff funny money received by Fred Wilpon, his brother-in-law and team partner Saul Katz and their Sterling Equities firm — but also threatens to force the owners and their families to pay back every penny they invested in hundreds of accounts with Madoff.

That could put the Mets’ owners on the hook for a cool $1 billion — and possibly force them to sell the team.

READ THE COMPLAINT (PDF)

TRUSTEE’S STATEMENT

STERLING’S STATEMENT

STERLING ATTORNEYS’ STATEMENT

“There are thousands of victims of Madoff’s massive Ponzi scheme. But Saul Katz is not one of them. Neither is Fred Wilpon. And neither are the rest of the partners at Sterling Equities,” states the 365-page lawsuit, which was filed in Manhattan federal bankruptcy court.

“Sterling Partners knew, or should have known that Madoff’s consistently high and extremely non-volatile returns over almost a quarter-century were ‘too good to be true’ because they were at odds with the strategy Madoff purported to employ,” the suit said. “Sterling partners knew or should have known that with every withdrawal from their [Madoff] accounts they reaped the benefits of a fraud.

“Numerous financial-industry professionals warned Sterling about Madoff and even speculated that he was operating a fraud. The Sterling Partners, however, categorically rejected any criticisms of Madoff — even those voiced by their most trusted, financially sophisticated advisors and business associates,” the suit said. “The warning signs were many and varied.”

VACCARO: WILPON NEEDS TO STEP AWAY FROM THE BROKEN METS

WILPON’S LOSING HIS GRIP ON THE TEAM

NEW LIFE TO EARLIER CHASE SUIT

The “clawback” suit was filed last month by bankruptcy trustee Irving Picard.

Stung by the allegations, the Mets’ owners lashed out yesterday and said they had done nothing wrong.

“The trustee’s lawsuit is an outrageous ‘strong-arm’ effort to try to force a settlement by threatening to ruin our reputation and businesses which we have built for over 50 years,” Wilpon and Katz said in a statement. “This is a flagrant abuse of the trustee’s authority, and we will not succumb to his pressure. The conclusions in the complaint are not supported by the facts.

“We should not be made victims twice over — the first time by Madoff and again by the trustee’s actions.”

The Wilpon-Katz team has claimed for more than two years that they lost money by investing with Madoff — who is serving a 150-year federal prison sentence in North Carolina — and noted yesterday that when he was arrested, they had more than $500 million in Madoff accounts.

“All of it lost,” their lawyers noted of that money.

The suit claims that Wilpon, Katz and their Sterling Equities firm were heavily reliant on the “profits” that they reaped by investing in hundreds of accounts held at Madoff’s firm.

“Madoff money flowed through every aspect of Sterling’s business. Be it real estate, professional baseball or private equity,” the suit said. “Given Sterling’s dependency on Madoff, it comes as no surprise that the Sterling Partners willfully turned a blind eye to every objective indicia of fraud before them.

“The Mets alone had 16 related [Madoff firm] accounts from which Sterling withdrew over $90 million in fictitious profits . . . much of [which] helped fund its day-to-day operations,” the suit said.

Madoff-invested money was “used to cover significant expenses, such as payroll, players’ deferred compensation, and stadium operations,” the suit said.

The suit said that even after Wilpon and Katz moved in June 2002 to give themselves an alternative to investing with Madoff, they refused to act on warning signs that he was a scam artist.

The Mets’ owners and a businessman named Peter Stamos created a hedge fund called Sterling Stamos that within six years was managing $393 million for Sterling Equities.

The suit said that Sterling Stamos “rejected Madoff and told the Wilpon and Katz families about [its] concerns. Notwithstanding [its] concerns, the Wilpon and Katz families continued to invest with Madoff.”

The suit also states: “At least one Sterling consultant advised Saul Katz in and around 2003 that he ‘couldn’t make Bernie’s math work, and something wasn’t right.’ ”

Brushback pitches that should have tipped Wilpons they would strike out

Fred Wilpon

CHAIRMAN AND CEO

Accused of ignoring signs of Madoff improprieties in order to continue reaping massive profits.

* Warned by Sterling Stamos hedge-fund partner, Peter Stamos, that Madoff’s investment firm would not pass the fund’s due-diligence requirements and that Wilpon and Mets partner Saul Katz should not invest with Madoff.

Saul Katz

PRESIDENT OF METS

The brother-in-law of Fred Wilpon and partner in the franchise had blinders on when it came to Madoff, the suit claims.

* “At least one Sterling consultant advised Saul Katz in and around 2003 that he ‘couldn’t make Bernie’s math work, and something wasn’t right,’” Picard’s suit states.


Mr. MET

MASCOT

Unwitting accomplice in team owners’ massive investment in — and profit from — Bernard Madoff’s epic Ponzi scheme.

* “The Mets alone have 16 related [Madoff-related] accounts from which Sterling withdrew over $90 million in fictitious profits,” the Picard complaint states.

Bernie Madoff

WORLD BIGGEST SWINDLER

Traded on his close personal relationship with Fred Wilpon and his family to attract investments over three decades that now have the Mets on the brink of ruin.

* According to Picard’s suit: “In a telling Dec. 12, 2008, e-mail exchange, one Sterling Stamos employee confirmed that ’[firm’s] chief investment officer had fingered Madoff as a fraud for years.”

bruce.golding@nypost.com