Wednesday, 25 November 2015
Last updated 1 hour ago
Mar 23 2011 | 12:30pm ET
The court-appointed trustee in the Bernard Madoff case's revised lawsuit against the owners of the New York Mets is little more than an extortion attempt, the team's owners said in their first legal response to the claims against them.
Irving Picard has accused Fred Wilpon and Saul Katz of ignoring red flags in their longtime relationship with Madoff, and charges they knew or should have known that Madoff was perpetrating a $65 billion fraud. But Wilpon and Katz say Picard's demand for $1 billion is essentially blackmail.
"Examination of the evidence makes clear the trustee's complaint was crafted to pressure the Sterling Partners to pay a huge settlement," Wilpon and Katz's lawyers, referring to their holding company, Sterling Equities, said.
Last week, Picard revised his lawsuit against Sterling, adding allegations that it hid a $54 million loan from Madoff to repurchase the Mets' television rights as an investment by Madoff's wife, Ruth, that it was "repeatedly warned" that Madoff might not be on the up-and-up, and that it sought to keep Picard from recovering money for Madoff victims by restructuring the team's debt after Madoff's arrest in 2008.
Picard said that the Mets used some $90 million in false profits from Madoff to fund the team's day-to-day operations, showing the team's "deep dependency" on Madoff.
Sterling said that Picard essentially made up many of those allegations to force it to settle.
Wilpon and Katz added that Picard's estimate of their earning $300 million in false profits in 30 years of investing with Madoff is twice as high as it should be, as it does not take into account the more than $500 million they thought they had in their Madoff accounts when the Ponzi scheme collapsed.
Sterling also complained that Picard had withheld evidence from them in spite of their "reasonable request." Its response called that "inexplicable and unjust."
Picard shot back that the Mets owners would be treated the same as all of the other Madoff "winners" he's suing. U.S. Bankruptcy Court, where the case is being heard, has much less strict discovery requirements than other federal courts.
"Good cause is not to defend against bad press or prepare a motion to dismiss on the merits," he said in a court filing. "The sliding scale of when a case has attained sufficient notoriety to warrant departure from federal and bankruptcy rules is not a workable standard by which to evaluate good cause."
The Mets say that Picard is obfuscating, hiding the fact that his evidence is not as strong as he claims to buy time to force a settlement.
"We don't think the proper analysis is, 'Why should this information be provided?'" General Counsel David Cohen said. "The question should be, 'Why won't the trustee provide it?'"
The Mets earlier this year announced plans to sell a minority stake in the team to raise money in the face of Picard's lawsuit.
Oct 21 2015 | 10:41am ET
One of the most unique charity benefits in the hedge fund industry, A Leg To Stand On's (ALTSO's) Hedge Fund Rocktoberfest - NYC, raised nearly $500,000 last Thursday thanks to the generous support of major sponsors and nearly 1,400 attendees from the Tri-State finance, business and hedge fund communities. Read more…