Madoff trustee allegations vs. Mets' denials
The Mets ownership group repeatedly has denied that the team's finances were connected to investments made with disgraced broker Bernie Madoff. But Irving Picard, the trustee in charge of the "clawback" lawsuit against Sterling Equities, claims that is not the case in the 365-page complaint made public on Friday.
Picard alleges that the Mets and Brooklyn Cyclones, the team's Class A affiliate, had about 16 accounts with Madoff and withdrew "over $94 million of Fictitious Profits" from these Mets-related accounts. The lawsuit also claims "a significant amount of the $94 million Sterling received of other people's money went to fund the day-to-day operations of the Major League Baseball franchise."
Picard's allegations are contrary to statements previously made by the Mets after Madoff's Ponzi scheme had been exposed. Team officials maintained that the Mets were a separate entity and not at all involved with the Madoff investments made by Sterling Equities, the Wilpon family owners' investment firm.
"It's truly two different things," chief operating officer Jeff Wilpon told Newsday in December 2008. "It's not affecting the [Mets'] business."
Wilpon also told The New York Post at the time that the Madoff losses were "unconnected to funds used to operate the Mets and there will be zero effect on the team. We have other money. You guys don't know how much money we have, but we have other money in other funds outside of this. It's called diversification."
In the lawsuit, Picard devotes nearly three pages to the team's role, under the headline, "Sterling used [Madoff] accounts to support the operations of the New York Mets." In paragraph No. 793, the trustee alleges that these accounts "were used to provide the cash flow necessary to run the day-to-day operations of the Mets." He also alleges they were used "to cover significant expenses, such as payroll, players' deferred compensation and stadium operations."
As far as the team's ability to compete on the field, Picard alleges that the "estimated returns from the Mets-related accounts were consistently built into the Mets' cash flow projections and budget analyses."
As recently as last October, on the day that general manager Omar Minaya and manager Jerry Manuel were fired, principal owner Fred Wilpon tried to alleviate concerns that the Mets had been crippled by the Madoff scandal - and pending lawsuits.
"The Madoff issue was one business investment part of our business," he said. "We have several other parts of our business. We have several other kinds of companies, and all are doing either reasonably well or very well. . . . As far as Madoff is concerned . . . I'm not minimizing the money. It was only one part of our business and took some liquidity away, but that's not the part of the business that was run in the shop."