N.Y. Mets Settlement With Madoff Trustee Wins Court Approval
U.S. District Judge Jed S. Rakoff ruled today in New York on the accord. It was announced March 20, the day a trial was to start over whether the Mets owners acted in bad faith when they withdrew money from Madoff’s Ponzi scheme.
Under the settlement, with Fred Wilpon, Saul Katz and dozens of related parties, the Mets owners owe the Madoff estate $162 million in phony profits from the fraud. The Wilpon and Katz payments may be offset by their claims to have suffered $178 million in losses.
In court papers supporting the settlement last month, former New York governor Mario Cuomo, a court-appointed mediator in the case, told Rakoff he believes the settlement “is reasonable, fair, equitable” and in the best interests of former Madoff customers.
As part of the agreement, the liquidator, Irving Picard, dropped his claim that the Mets owners blinded themselves to Madoff’s Ponzi scheme because it benefited their businesses. Picard also gave up his demand that the Wilpon group return principal they invested with Madoff and then withdrew.
The settlement resolves a case in which Picard had sought $1 billion from the Mets owners for the benefit of former Madoff customers. In a series of rulings, Rakoff narrowed to $386 million the amount Picard could try to recover.
The main question for the trial was to have been whether the owners acted in bad faith when they withdrew $303 million of their own money from Bernard L. Madoff Investment Securities, the brokerage Madoff used to run his swindle.
The settlement amount is equal to all of the profit withdrawn by the Wilpon group in the six years before Madoff’s December 2008 arrest, Picard said. Rakoff had ruled that Picard could claim only two years’ profit, as much as $83 million.
Madoff’s Ponzi scheme cost investors an estimated $20 billion in principal, according to Picard.
Madoff, 74, pleaded guilty in 2009 to orchestrating what prosecutors called the biggest Ponzi scheme in history. He’s serving a 150-year sentence in federal prison in North Carolina.
The case is Picard v. Katz, 11-cv-03605, U.S. District Court, Southern District of New York (Manhattan).
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