Talks break down between Madoff trustee, Mets
They're playing hardball now.
Negotiations broke down Thursday between Mets owners and a court trustee, whose full claim against them for victims of the Bernard Madoff fraud is expected to become public Friday.
Legal experts familiar with the Madoff investigation who don't want to be named have estimated Picard is seeking to "claw back" $250 million to $1 billion, which he contends represent profits taken by the Wilpons, Katz and their companies from Madoff's scam operation.
The Mets ran up the white flag in their effort to keep Picard's complaint sealed after several days of crossfire between the two camps in the news media.
The complaint's unsealing and the breakdown of negotiations are expected to pose new potential complications for the Wilpons' effort to sell up to 25 percent of the team while retaining majority control. If the two sides cannot settle and instead go to trial, the uncertainty will be prolonged.
"It is not a good sign for the Mets, in my view," said attorney Howard Kleinhendler of Manhattan, who represents other Madoff clients and has battled with Picard. "What it indicates is that the trustee is driving a very hard bargain and the Wilpons balked at coming up with cash."
Officials from neither the Mets nor Major League Baseball would comment on the developments.
The Wilpons and Katz announced last week they were seeking to sell a piece of the team to raise cash because of the settlement talks.
The trustee disclosed the collapse of negotiations Thursday afternoon.
"Settlement discussions with Sterling Equities, its partners, their family members, and certain related trusts and entities, are no longer moving forward," attorney David Sheehan, counsel for Picard, said in a statement to Newsday.
Sterling Equities is the Wilpons' real-estate investment firm.
Sheehan first revealed the stalled talks in a letter to Manhattan federal bankruptcy court Judge Burton Lifland yesterday, in which he also asked the court to unseal the complaint filed in December against the Wilpons. "Defendants cannot cry confidentiality to this court while publicly attacking the complaint and frustrating the public's right to know the contents," Sheehan wrote.
News organizations including Newsday had earlier asked Lifland to unseal the complaint.
Later, in another unexpected development, the Wilpons, who had strenuously argued to keep the more than 350-page complaint under wraps, agreed Thursday to have the document unsealed. They cited a swarm of news stories about the case and leaks about the allegations in the complaint.
"The objective of keeping the complaint sealed are [sic] no longer being served, so the [Wilpons] consent to its immediate unsealing," said attorney Karen Wagner in a letter to Lifland late Thursday.
Wagner defended comments made by colleagues to the media, saying that leaks of "one-sided and misleading information" forced the Wilpons and their companies to respond.
Lifland has to sign an order directing the unsealing, and court officials said he was not in the office. Lawyers in the case expect the document, which is believed to detail years of personal and financial relationships between the Wilpons and Madoff, including raising of money to fund Mets operations, to be made public this morning. With Jim Baumbach