Saul Katz and Fred Wilpon, the owners of the New York Mets baseball team, have agreed to pay $162 million to settle a lawsuit brought against them by the trustee seeking money for victims of Bernie Madoff's fraudulent Ponzi scheme.
The Mets owners reached the settlement with Irving Picard, the court-appointed trustee overseeing the liquidation of Bernard Madoff's estate, just as a jury trial was scheduled to begin Monday.
The Mets owners will not have to make a payment for three years and will, instead, surrender their claims against the bankruptcy estate.
The stakes for both the parties would have been high in the case. Had they gone to trial, the Mets owners might have been required to surrender about $303 million to Picard for allegedly ignoring the fraud.
A verdict involving more money could have had a devastating impact on the Mets owners as they are not in a position to pay the asking money. They would also have been required to sell additional stakes in the Mets team to raise nmoney.
For Picard, a loss would have made it more difficult for him to recover the investor funds he is seeking through other lawsuits.
It has been more than a year since Picard sued the Mets owners and their business partners for $1 billion, accusing them of knowingly ignoring warning signs of a fraud by Madoff, who was arrested in December 2008.
Wilpon and Katz as well as associated individuals and firms are alleged to have received $300 million from the scheme.
In March 2009, Madoff, a former non-executive chairman of the Nasdaq stock market, pleaded guilty to a massive Ponzi scheme through his firm Bernard L. Madoff Investment Securities LLC, which reportedly involved around $65 billion of investors' money.
In June 2009, he was sentenced to 150 years in prison, the maximum allowed. The trustee estimated actual losses to investors of $18 billion.
Katz and Wilpon are among a group of investors who were ordered by a federal judge earlier this month to pay back around $83 million in profits from Madoff's Ponzi scheme, considered to be the largest financial fraud in U.S. history.
This figure represents the profits made by the Mets owners in the two years leading up to the collapse of the Ponzi scheme in December 2008, when Madoff was arrested.
Judge Jed Rakoff of U.S. District Court in the Southern District of New York, in his four-page ruling, ordered the owners to make the payment to Picard. The judge also ruled at that time that the Mets owners must face a jury trial over the additional $303 million.
by RTT Staff Writer
For comments and feedback: firstname.lastname@example.org