Mets Owners Fred Wilpon and Saul Katz reached a $162 million deal with the trustee overseeing the Bernie Madoff suit on Monday. Wilpon and Katz, longtime investors with Bernie Madoff, will receive $178 million from Irving Picard, the court-appointed trustee for Madoff's firm, of which $162 million will be used to pay other duped Madoff investors.
Bernie Madoff ran one of the largest Ponzi schemes in history, misleading thousands of investors with fake or artificial profits. Madoff pleaded guilty to fraud charges three years ago and is currently serving a 150-year life sentence.
The settlement allows the Mets owners to keep the Mets franchise, one of baseball's most valuable but also one currently saddled with millions of debt. The Mets lost $121 million over the past two years and have laid off both players and office staff to try to shore up the team's finances. According to a report in The New York Times, the Mets have purportedly sold all 12 minority stakes in the club for $20 million each. A Standard & Poor's report determined that the Mets' overall revenue in 2011 dropped 12 percent.
The Wall Street Journal's Greg Zuckerman said the settlement is "pretty much a win for everybody but a Mets fan." In an interview with The Daily Ticker, Zuckerman said Mets fans were hoping the owners would have been forced to pay a much larger payout, therefore forcing them to sell the team.
By settling, the Mets owners avoided another Madoff lawsuit expected to begin in U.S. District Court in Manhattan next Monday. In that court case, Wilpon and Katz would have had to prove they were not "willfully ignorant" as Madoff investors. Wilpon and Katz could have paid as much as $386 million to Picard if Judge Jed Rakoff ruled against them in the suit.
Picard has filed more than 1,000 lawsuits on behalf of Madoff's victims and has recovered nearly $11 billion. The size of Madoff's Ponzi scheme has been estimated to be as high as $50 billion and as low as $17 billion.
"It's a pretty good victory for [Picard] and he moves on," Zuckerman said. "Picard wants closure so payouts can be made."
Zuckerman noted that many of Madoff's investors may come out ahead after Picard returns the billions he's recovered to them.
"A lot of them petitioned and got back some of the taxes they paid on these phantom gains," he says. "[The investors] may have to pay back what was refunded to them. I bet you they won't."
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- Bernie Madoff
- Irving Picard