Owners of the New York Mets baseball team renewed their request that a $1 billion lawsuit by the liquidator of Bernard Madoff’s firm be thrown out after a judge said the trustee may have erred in demanding money from them.
Fred Wilpon and Saul Katz said yesterday in a court filing that the trustee, Irving Picard, wasn’t entitled to take back principal or so-called fictitious profit they made in Madoff’s Ponzi scheme. Picard argued they should have investigated the fraud.
U.S. District Judge Jed Rakoff in Manhattan agreed last week to review the case, saying that judges have struggled with the duty of inquiry into fraud for more than half a century, and it may not have been the “governing law” for the Mets owners.
Picard seeks the return of $700 million in principal and $300 million in profit, saying the team’s owners had a duty to investigate “red flags” warning of possible fraud.
The Mets owners said the payments, made over 25 years, “discharged the broker’s legal obligation to its customers,” and couldn’t be treated as so-called fraudulent transfers, as Picard tried to do.
“The trustee can prove no such guilty knowledge, nor any bad faith,” they said in the filing.
The Mets owners first asked Rakoff to dismiss the suit last month.
The case is Picard v. Katz, 11-cv-03605, U.S. District Court, Southern District of New York (Manhattan).