Friends defend Mets' Katz over Madoff scam

Mets GM Sandy Alderson, second from right, stands Mets GM Sandy Alderson, second from right, stands with team owners (left to right) Saul Katz, Fred Wilpon and Jeff Wilpon. (undated file photo) Photo Credit: Getty Images, 2010

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His admirers and his chief accuser in the Mets-Madoff mess all agree: Saul B. Katz knows numbers.

The son of poor Polish immigrants, Katz used his skills as a certified public accountant to help make Sterling Equities of Great Neck a real estate powerhouse over four decades. The same talents were employed to build the Mets a new stadium and create Long Island's largest network of hospitals.

But Katz's reputation for financial acumen is now being used against him by a bankruptcy trustee for victims of Bernard Madoff's Ponzi scheme. Trustee Irving Picard, in a lawsuit unsealed Feb. 4, alleged that Katz and his partners, including brother-in-law Fred Wilpon, ignored multiple warning signs and "knew or should have known" that their high-yield returns on investments with Madoff were "too good to be true."

Picard presents a damning portrayal of Katz as a businessman who, along with his associates, willfully turned a "blind eye to the red flags paraded before them." Picard said Katz was told Madoff's math "wasn't right" but never undertook an investigation.

The legal spectacle threatens to force a sale of the Mets and has cast a harsh spotlight on Katz. Though barely known to the public, the Glen Cove resident has long been an influential player in real estate and philanthropic circles, making friends eager to defend him.

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He was duped, friends say

"I'm sure nobody, except maybe his wife, knows all the things that he does to help people. He's very humble," said former Nassau County Executive Thomas Suozzi, who first met Katz through his father when both were board directors of Glen Cove Hospital.

Neighbors, business partners and friends said they believe Katz was duped by Madoff, just like other wealthy investors and the U.S. Securities and Exchange Commission.

If Katz knew about the swindle, his supporters argue, he wouldn't have encouraged family members and charities he supports to entrust their money to Madoff.

"Saul Katz is brilliant . . . . He has exceptional analytical skills where he can look at the numbers and determine whether or not a deal makes sense," said Jerry Reisman, a Garden City lawyer who once worked on a Sterling transaction and now represents investors who were ripped off by Madoff. "However, being a CPA and being intelligent doesn't mean you had actual knowledge that Madoff was committing a fraud."

Among the other Katz family members named as defendants in the suit to recover Madoff profits are Katz's wife, a son, two daughters, a brother, a sister-in-law, three nephews and a nephew's wife.

A 'real worker' and a giver

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Katz, who turns 72 this week, started life in Brooklyn with little. His parents came to America in the 1920s from Poland at a time when Jews faced persecution.

He studied accounting at Brooklyn College and worked for others before joining Fred Wilpon to form Sterling in 1972. Over the years, the privately held business has purchased or built almost 58,000 apartments and 32 million square feet of offices and stores. It also has five real estate investment funds and since 2002 has been the Mets' sole owner.

Katz has touched many lives through charity work. The most recent tax filing by the larger of two family foundations shows the Katzes donated more than $2.9 million in 2009, most of it to local groups.

Katz remade area health care by bringing together the North Shore Health System and Long Island Jewish Medical Center in 1997. The merger required overcoming decades of geographic and religious prejudice and federal antitrust objections, said current and former board members.

"I told him it couldn't be done and he replied, 'Let's give it one more shot.' He just kept pushing," said Sol Wachtler, a former chief judge of the New York State courts and father-in-law to Wilpon's daughter.

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At the time of the merger, Katz chaired the North Shore board and Wachtler was an LIJ leader. Wachtler had already lost his judgeship after a guilty plea for harassing a former girlfriend.

During Katz's two terms as board chairman, North Shore-LIJ added two more hospitals and planned a medical school at Hofstra University. His donations have also helped underwrite the $300-million Katz Women's Hospital.

"Saul spends hours and hours on hospital business each week," said Richard Goldstein, current board chairman. "He's a real worker. He loves North Shore-LIJ."

According to the lawsuit, Madoff also made large donations to North Shore-LIJ and other charities in which Katz and Wilpon were involved, and the three men's families formed a strong relationship.

Facing Madoff accusations

Picard, the bankruptcy trustee seeking to recoup up to $1 billion from the Katz-Wilpon families and Sterling, has alleged that Katz on at least nine occasions received warnings about Madoff. Katz was the executive "primarily responsible" for Sterling's investments and spoke frequently with Madoff, according to the trustee.

A Picard spokesman did not respond to messages.

Katz and Wilpon have said in a statement, "Not one of the Sterling partners ever knew or suspected that Madoff ran a Ponzi scheme." They declined to comment for this story.

The Katz-Wilpon connection goes back decades and is rooted in Katz's 51-year marriage to Wilpon's sister, Iris. "Fred and Saul first met when Saul began dating Iris and then they eventually became business partners," said friend Robert J. McGuire, a former New York City police commissioner.

Katz has always been in Wilpon's shadow. "Fred is the more public of the two but they are very much partners and friends," McGuire said. "Saul understands the numbers and the business side while Fred is much more the creative guy."

Humble despite success

Friends said Katz is a devoted father and dotes on his eight grandchildren. His son, brother and nephew are Sterling executives.

The size of Katz's fortune is unclear, though his home and land in Glen Cove are valued at more than $5 million. Despite his financial success, neighbors and members of his two synagogues describe him as down to earth.

"Saul and Iris Katz are extraordinarily wealthy and have been generous with their money," said Jay Jacobs, the state and Nassau Democratic Committee chief, whose day camp adjoins the Katz home near Hempstead Harbor. "But if you meet and talk to them, they never let you know it. These are people who don't wear it on their sleeves."

A member of Congregation Tifereth Israel in Glen Cove agreed, saying Katz provides money for children to go to Hebrew school if their parents cannot afford tuition.

"He doesn't want people to know he's helping," said the congregant, who requested anonymity. "It was years before I knew the man I pray with was super-rich."

THE FACTS ON SAULKATZ

Age: 71

Hometown: Raised in Brooklyn; has lived in Glen Cove for 42 years.
Career highlights: Co-founded Great Neck-based Sterling Equities, a real estate development and investment company, with Fred Wilpon, 1972; bought a minority stake in the Mets with Wilpon, 1980; and they became full owners of the Mets, 2002.

Philanthropy: Was twice board chairman of the North Shore-Long Island Jewish Health System; through family foundations donates to education, law enforcement and health care groups, including North Shore-LIJ, Abilities! and Jewish Foundation for the Righteous.

Madoff ties: 68 accounts; allegedly received $14 million in profits directly

Family: Wife, Iris (sister of Fred Wilpon); three children
Education: Bachelors degree in accounting from Brooklyn College, 1960

Sources: Public records and interviews

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