Madoff lawsuit targets Wilpon family profits
The special trustee in the Bernard Madoff fraud case took a big swing for the fences Tuesday as he filed a lawsuit against the owners of the New York Mets, including Fred Wilpon, his son Jeff and other members of their family in an effort to take back profits they allegedly received in what turned out to be a big Ponzi scheme.
Irving Picard filed his sealed complaint for an unspecified amount in Manhattan federal bankruptcy court and said his office and the Wilpons, as well as their various business entities and associates, were engaged in what he called "good faith settlement negotiations."
Because of those negotiations, Picard agreed to file his so-called clawback complaint, known in bankruptcy law as an adversarial proceeding, under seal, but indicated that he reserved the right to ask the court to unseal the records at a later date. A clawback complaint is one which attempts to recoup money believed to be improperly paid out to investors.
A spokesman for Sterling Equities, an umbrella company for many of the Wilpons' businesses, including the Mets and also a company sued by Picard, said the firm would have no comment while negotiations were under way. At the same time, the company said it had sufficient economic resources for the baseball team's continuing activities.
"We want to emphasize that the New York Mets will have all the necessary financial and operational resources to fully compete and win. That is our commitment to our fans and to New York," Sterling Equities said.
Sterling Equities, a Great Neck real estate conglomerate founded in 1972, also owns the SNY regional sports television network and the Brooklyn Cyclones minor-league baseball team, and has interests in medical research and bio-energy technologies.
The lawsuit against the Mets owners came on a day of other developments in the Madoff case. Late yesterday, federal prosecutors in Manhattan said they had reached a settlement with financier Carl Shapiro and his family for $625 million, the largest so far in the Madoff case. Shapiro, one of Madoff's initial investors as far back as the 1960s, agreed to forfeit the money as proceeds of the Ponzi scheme. The forfeiture amount is in excess of the net worth of Shapiro and his wife and is also more than the fictitious profits they took out of Madoff's company, Manhattan U.S. Attorney Preet Bharara said in a statement. The Shapiros didn't admit any wrongdoing, Bharara noted. Defense attorney Stanley Arkin declined to comment.
Fred Wilpon, 74, has risen through the ranks of Mets ownership, beginning Jan. 24, 1980, when he and Doubleday & Co. bought the team from the Payson / deRoulet family for $21.1 million. Wilpon's stake was a reported 5 percent.
That increased to 50 percent in 1986 when Wilpon and partner Nelson Doubleday bought the team from Doubleday's publishing company for $100 million. And then 16 years later, during the summer of 2002, Wilpon and his Sterling partners bought out Doubleday's share, taking full control of a Mets franchise that had been appraised that year at $391 million.
In its 2010 study of major-league franchises released in April, Forbes valued the Mets at $848 million. Jeff Wilpon became the team's chief operating officer in 2002, beginning the process of passing the reins of the franchise from father to son. He oversaw the construction of the Mets' new stadium, Citi Field, which opened in 2009.
Over $550 million of the Shapiro forfeiture will go directly to Madoff victims, Orlan Johnson, chairman of the Securities Investor Protection Corporation, told Newsday. SIPC is paying all of Picard's legal fees, as well as those of his law firm Baker & Hostetler in the search for assets to pay back investors. Madoff's Ponzi scheme cost his customers $20 billion and he is serving 150 years in prison.
So far, Picard has recouped $2.6 billion for Madoff customers and is expected to announce more settlements in the coming weeks.
Sterling and the Wilpons have been guarded about their Madoff-related financial details. But bankruptcy court filings last year said the Mets Limited Partnership, of which Fred Wilpon is chairman, took out more than $45 million more than it invested with Madoff. The partnership invested a total of $522.7 million with him, records show.
With Jim Baumbach