(Bloomberg News) The $162 million settlement that resolves claims by the liquidator of Bernard Madoff's firm against the owners of the New York Mets won't require them to pay any money for at least four years, if ever.

U.S. District Judge Jed Rakoff announced the settlement yesterday before the parties were set to pick a jury for a trial over whether the Mets owners acted in bad faith when they withdrew money from Madoff's Ponzi scheme. Under the settlement, Fred Wilpon, Saul Katz and related parties owe the Madoff estate $162 million in fictitious profits, which may be totally or partially offset by their own claims for $178 million in losses.

As part of the agreement, the liquidator, Irving Picard, dropped his allegation that the Mets owners blinded themselves to Madoff's Ponzi scheme because it benefited their businesses. Picard also gave up his demand that the Mets return money they invested with Madoff and then withdrew.

"We were not willfully blind," Wilpon said after a hearing in Manhattan. "This settlement bears that out."

Rakoff is making it harder for the trustee to use lawsuits to pay other Madoff customers. The judge's rulings on Picard's claims against the Mets owners, which he cut by about two thirds from $1 billion originally, have spurred defendants in about 280 similar lawsuits to ask Rakoff to review the trustee's claims against them.

Other Suits

Rakoff said this month he would decide if Picard, in a $900 million lawsuit against defendants including Frank Avellino who allegedly funneled money to the con man, "plausibly" suggested willful blindness to the Ponzi scheme. Barclays Plc's Swiss affiliate wants a district judge to review a $67 million lawsuit, saying it also raises "willful blindness" issues.

"Picard had to be concerned about whether he could secure a favorable verdict from a jury," said Michael Clark, a former federal prosecutor at Duane Morris LLP in Houston who has tried about 100 cases. A "bad result" might have emboldened defendants in other clawback cases to resist settling, he said.

Rakoff and another district judge, Colleen McMahon, also have tossed about $90 billion of Picard's claims against banks including JPMorgan Chase & Co., HSBC Holdings Plc, UBS AG and UniCredit SpA. Picard is appealing most of the rulings.

Wilpon said he will fly to Florida, where the Mets are holding spring training, with the goal of bringing the team "back to the prominence that our fans deserve." The Mets have three wins and 11 losses through March 18 in spring training games this year, last in the Grapefruit League.

The settlement was reached March 16, with the assistance of former New York Governor Mario Cuomo, who acted as mediator in the dispute. Rakoff must approve the deal for it to take effect.

Sword Of Damocles

"Both sides helped their respective causes," said Cuomo, who played minor-league baseball for the Pittsburgh Pirates organization. Picard recovered money for Madoff victims while avoiding "a long, bitter expensive trial," he said. The Mets owners were able to remove "the sword of Damocles" hanging over their heads and return to their business.

When asked if there was animosity between the parties in the negotiations, Cuomo smiled, saying "When we're confronted by it, we ignore it."

The settlement resembles other deals struck with Picard. Under an agreement with Tremont Group Holdings Inc. last year, $1 billion due to the Madoff estate would be offset by the hedge fund firm's $3 billion in claims, according to court filings.

Asked why Picard would settle with the Mets owners, Cuomo said bills have been introduced in Congress, partly inspired by the Mets case, that might "strip" the trustee of some of his current powers.

Amanda Remus, a Picard spokeswoman, didn't immediately respond to an e-mail seeking comment on Cuomo's remarks.

Madoff Customers

The Mets negotiations began gaining momentum early last week, according to lawyer David Sheehan, who represents Picard. The parties finally reached a deal on the night of March 16, he said.

"The settlement is for the benefit of all the customers," Sheehan said.

The trustee has struck similar deals with "other good faith victims of the Madoff fraud," Robert Wise, a lawyer for the Mets owners, said as Wilpon and Katz emerged from the courthouse.

Six Years

The settlement amount is equal to all of the profit withdrawn by Katz and Wilpon and a group of related individuals, family trusts and entities in the six years before Madoff's December 2008 arrest, Picard said in a statement. Rakoff had ruled that Picard could only claim two years of profits, as much as $83 million.

The main question for the trial was to have been whether the owners acted in bad faith when they withdrew $303 million of their own money from Bernard L. Madoff Investment Securities, the brokerage Madoff used to run his swindle.

In the settlement, the Mets owners assign to Picard their $178 million in claims against the Madoff estate. Katz and Wilpon provided personal guarantees of $29 million in case Picard is unable to collect the full $162 million agreed in the settlement.

The amount Picard collects on the claims assigned to him by the Wilpon group will be determined by the total amount Picard collects on behalf of Madoff's customers. Under the agreement, Katz and Wilpon don't have to dip into their own pockets for at least four years.

Trial Opposed

The Mets owners had opposed a jury trial and tried unsuccessfully to get the remaining claims brought by Picard dismissed after Rakoff cut them back to $386 million from $1 billion.

Picard's lawyers had said they were confident a jury would find the Major League Baseball club's owners deliberately ignored the fraud because it benefited their businesses, ranging from the team to real estate.

The Ponzi scheme cost investors an estimated $20 billion in principal, according to Picard.

Madoff, 73, pleaded guilty in 2009 to orchestrating what prosecutors called the biggest Ponzi scheme in history. He's serving a 150-year sentence in federal prison in North Carolina. Picard and his law firm, Baker & Hostetler LLP, have charged about $273 million in fees for liquidating the Madoff firm since it collapsed in December 2008.

The first official word of the settlement came from Rakoff, who had scheduled jury selection for today.

"It's a lovely day for a trial," Rakoff said after taking the bench this morning. "But the parties have something else in mind."

The case is Picard v. Katz, 11-cv-03605, U.S. District Court, Southern District of New York (Manhattan).