(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.