As the trustee handling recovery of investor funds in the Bernard Madoff case prepares perhaps as early as this week to file hundreds of lawsuits against some of the investors, which may include the owners of the New York Mets, court records show that some wealthy customers have already turned over about $500 million.
The settlements - some done publicly and others quietly - were structured to avoid big-money judgments - involved funds trustee Irving Picard alleged were improperly doled out by Madoff in the six years before his multibillion-dollar Wall Street fraud unraveled in December 2008. The bulk of the recovery has come from a $220-million settlement of Picard's lawsuit against the family of the late real estate broker Norman Levy, as well as settlement of $235 million with the Optimal Funds, court records show.
In addition, investors who got money in the 90 days before Madoff's firm crashed have forked over $43.1 million to the trustee, cash representing "preference" payments that under the bankruptcy law must be returned, according to court filings late last month by Picard.
Picard is hoping to get at least hundreds of millions of dollars from investors as a result of the expected filings.
Madoff lost an estimated $20 billion of investors' money, and Picard has recovered $1.5 billion so far. He is in settlement discussions over a $7.2 billion lawsuit with the family of the late philanthropist Jeffry Picower.
Since 2009, Picard has filed several "avoidance" lawsuits or "clawback" cases. The suits are aimed at recovering money from investors who allegedly received several hundred million dollars from Madoff in amounts that exceed what they originally invested. Picard deemed those investors "net winners," and he has said they really received cash stolen from later investors in the Ponzi scheme.
Madoff - who is serving a 150-year prison term in North Carolina for securities fraud - never made any money for his company in his scheme and simply paid off investors with funds stolen from other investors.
Picard wouldn't comment last week on which Madoff investors he intends to sue, but said in court papers that hardship cases and those who cooperated with his investigation will be spared. Still, net winners for tens of millions to hundreds of millions of dollars are vulnerable, court records show.
Among the big local investors identified in court filings as net winners are the Mets Limited Partnership, Sterling Mets Lp, and several related companies affiliated with the Wilpon family, owners of the Mets baseball team. Attorneys for the Wilpons and the related companies, without indicating amounts, have filed court papers indicating their claims for recovery of cash in bankruptcy court have been denied.
However, in a list of some alleged net winners filed in October 2009, Picard's staff said the Mets Limited Partnership had two Madoff accounts in which withdrawals exceeded the combined deposits of $522.7 million by $48 million, an amount Picard could potentially sue to recover.
Attorneys for Sterling and the Mets didn't return telephone calls Friday for comment.
In court papers, the Sterling related firms are arguing that Picard is improperly calculating the value of their accounts and should instead give them the value reported by Madoff in his last account statements to customers, figures Picard and law enforcement officials say were bogus.