Saturday, 24 September 2016
Last updated 21 hours ago
May 20 2011 | 8:12am ET
Irving Picard, the court-appointed trustee in the liquidation of fraudster Bernie Madoff’s firm, has a opposed a motion to dismiss his lawsuit against Sterling Partners, a group of companies controlled by Fred Wilpon and Saul Katz, the owners of the New York Mets baseball team.
Wilpon and Katz are seeking either the dismissal of the trustee’s complaint or summary judgement.
In a brief filed Thursday against the motion to dismiss, Picard contends that Wilpon and Katz knew Madoff was up to no good, as evidenced by their exploring the purchase of “fraud insurance” in 2001 for their investments with Bernard L. Madoff Investment Securities.
The trustee also cites Katz’s own testimony in 2002 that he was “screaming for diversification” of their investments away from Madoff because “we don’t know what he does,” as well as testimony that Sterling Partners’ hedge fund business partners warned them of the danger their investments with BLMIS could be frozen in the event of an investigation into Madoff’s operations.
“Fred Wilpon, Saul Katz and the Sterling Partners are holding $300 million in fictitious profits consisting of ‘other people’s money,’ stolen money that they received from Bernard Madoff. Yet they refuse to return this stolen money,” said David J. Sheehan, a partner at Baker & Hostetler, the court-appointed counsel for the trustee.
For their part, Wilpon and Katz say Picard has misrepresented the facts of their case. Sterling Partners’ attorneys moved for summary judgment on the basis of two deposition transcripts they claim show Picard cherry-picked quotes to incriminate their clients.
“As the partners have said all along, they did not know Bernie Madoff was engaged in a fraud," Wilpon and Katz said in a statement. "There were no red flags and they received no warnings. The trustee's opposition papers filed today say nothing different. The only thing the trustee has debunked is the veracity of his own story."
Greg Nero, general counsel for Sterling Equities, told the New York Daily News that the claim Katz and Wilpon had gone shopping for fraud insurance was "just wrong.”
"They didn't go shopping," Nero said. "A trusted colleague made a recommendation about looking at insurance, so they spoke to an insurance salesman, received some basic information and they ultimately decided not to purchase it because they trusted Mr. Madoff—and believed that they did not need it."