The owners of the New York Mets baseball team were set to go on trial Monday in a crucial test of attempts to recoup billions of dollars lost during Ponzi conman Bernard Madoff’s fraud.
The official trustee seeking to help defrauded investors will try to persuade a jury that the Mets owners were so hooked on Madoff’s easy money that they deliberately ignored signs his investment business was a Ponzi scheme and should now cough up $303 million.
Mets co-owners Fred Wilpon and Saul Katz, whose balance sheet at the club is already resembles their hapless players’ record, will be fighting to keep funds which they say they withdrew from their Madoff account in good faith, never guessing that he was a criminal.
Unless a last-minute settlement materializes, the civil trial was due to start with jury selection Monday in Manhattan federal court.
Although much of the trial is expected to revolve around the dry details of financial dealings by the Mets before Madoff’s 2008 arrest and implosion of his pyramid scheme, the trial is stoking widespread public interest in a city with baseball and finance in its DNA.
At jury selection, lawyers will be working with a pool sure to be familiar with the troubles of the Mets and even perhaps fans angry at rising ticket prices and chronic inability to catch up with the rivalNew York Yankees.
The ordinary New Yorkers who get selected will then be asked to confront an explosive issue at the heart of the Madoff scandal: can wealthy investors who made millions thanks to a crook claim they were duped?
The result could have a bearing on efforts by the trustee, Irving H. Picard, to target other big Madoff investors, including JPMorgan Chase & Co bank. He is about half way to his stated goal of recovering some $20 billion in funds from former investors with Madoff, who is behind bars for life.
Judge Jed S. Rakoff has already ordered the Wilpon family to return as much as $83.3 million, separate to the $303 million at stake now. If the Mets lose this suit, then their financial slide may start to look even more like one of their team’s on-field fiascos.
However, Rakoff has also indicated he is “skeptical” that Picard can prove the team’s owners willfully ignored warning signs about Madoff, meaning the result of the trial is considered to be very much up in the air.
Madoff, a pillar of the Wall Street community, handled huge sums of money for a Who’s Who of the wealthy and powerful, ranging from international banks to Hollywood stars, and a host of institutions and individuals from his Jewish American community.
Bringing clients steady returns whatever the wider economic situation, Madoff earned the reputation of financial miracle worker. However, instead of making real profits, he was simply taking money from new investors to divide up and pay to existing clients, a scheme that worked until the stock market crash of 2008 prompted a cascade of redemption requests.
Among the witnesses the Mets owners want to testify are Sandy Koufax, a Hall of Fame pitcher and friend of Wilpon since school baseball days. Wilpon advised Koufax to invest with Madoff — proof, his lawyers say, that he must have had no suspicion that the Madoff miracle was phony.
The trial is expected to last two to three weeks.