U.S. District Judge Jed Rakoff dismissed much of the billion-dollar claim by the trustee, Irving Picard, in a ruling yesterday. Rakoff clarified that decision in an order today. The defendants include Sterling Equities Inc. partners Fred Wilpon and Saul Katz.
“The most that the trustee can recover from the defendants is the total of all transfers made during two-year period prior to the filing of the bankruptcy petition, which, according to the amended complaint, appears to be approximately $386 million,” Rakoff said in the order today.
Rakoff’s order was the first time the judge has said about how much money Picard can expect to try to recover, after the judge dismissed nine of 11 counts and established criteria for Picard to prove his case.
Rakoff said it remains an open question how much of that amount is fictitious profit and how much returned principal, saying he’ll decide the issue after both sides file briefs.
Rakoff said yesterday that Picard must show the Mets owners blinded themselves to knowledge of Madoff’s fraud in order to claim any of the principal that was returned to them in the two years before Madoff’s former firm filed for bankruptcy in late 2008. He set an easier standard for recovering profits.
The bankruptcy court case is Picard v. Katz, 1:10-ap-05287, U.S. Bankruptcy Court, Southern District of New York (Manhattan). The district court case is Picard v. Katz, 11-cv- 03605, U.S. District Court, Southern District of New York (Manhattan).
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