(Bloomberg News) A lawyer for the trustee liquidating the estate of Bernard L. Madoff said Mets owners Fred Wilpon, Saul Katz and the Sterling Equities Inc. partners "refuse to return" $300 million in "other people's money" received from the jailed con man.
Trustee Irving Picard's lawyer, David Sheehan, made the statement yesterday as part of a move to persuade a bankruptcy judge not to dismiss Picard's $1 billion lawsuit against the Mets owners. In addition to $300 million in what he called "fictitious profits," the trustee is seeking return of their principal invested with Madoff.
Picard said his case against Sterling and its partners stems from a bankruptcy-law concept of good faith. The concept doesn't require that those sued acted illegally or knew they were dealing with a Ponzi scheme, he said.
"Under bankruptcy law, a defendant did not act in good faith if what it knew about BLMIS gave it a reason to inquire further, but instead it turned a blind eye and continued to take money from an enterprise it should have known might be a fraud," he said in the statement. Bernard L. Madoff Investment Securities LLC was Madoff's investment firm.
"Today's filing recklessly rehashes the same fictitious claims" from the trustee, Sterling said yesterday in a statement. "He has no evidence, and no witnesses, to support his baseless claims."
Asking a judge in March to dismiss the Picard suit, the Sterling partners said they weren't professional investors and saw no warning signs.
The main case is Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities LLC, 08-ap-1789, U.S. Bankruptcy Court, Southern District of New York (Manhattan).