Wilpons' settlement resets negotiating bar

Emboldened by the settlement reached by the New York Mets' owners, other targets of the court-appointed trustee in the Bernard Madoff bankruptcy are eyeing tougher negotiating stances, lawyers involved in the cases said.

The settlement suggested that when pushed -- and with legal appeals slowing down distribution of funds to victims of Madoff's Ponzi scheme -- trustee Irving Picard is willing to accept less than he has sued for, the lawyers said.

"People are feeling pretty good right now," said Howard Kleinhendler, who represents a number of investors against whom Picard filed clawback cases similar to those which Mets owners Fred Wilpon, Saul Katz and their partners in Sterling Equities faced. "This [settlement] shows the weakness on the trustee's behalf, and people will be willing to test legal assumptions and go to the edge of trial."

Jerome Reisman, a Garden City attorney for 16 Madoff targets, agreed. "Many of the [clawback] defendants who have been sued now want to be very aggressive in their litigation and feel by being aggressive they can make the trustee agree with them."

Whether or not they're ultimately proven right, that means the victims of Madoff's fraud could face longer waits on recovering more losses.

Picard has obtained settlements for $9 billion, or 52 cents on the dollar for claims by defrauded investors, but has only been able to distribute 5 cents on the dollar.

Distribution of the rest has been held up by appeals and lawsuits filed by other parties objecting to the settlements.

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The Mets owners are now among those who have to wait. Though they agreed to pay $162 million in fictitious profits, Picard said they could pursue claims for $178 million in what were agreed to be genuine losses.

Both Picard and Sterling Equities declined to comment.

Kleinhendler said attorneys defending people Picard has sued now feel encouraged to test a number of other legal theories and have moved many of Picard's lawsuits out of bankruptcy court to federal court, which is deemed more sympathetic.

One legal expert cautioned that just because Wilpon and Katz were able to strike a deal doesn't mean Picard is going to give away the store.

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"It doesn't surprise me they [attorneys] feel emboldened but that would be a mistake on their part," said Anthony Sabino, a professor of business law at St. John's University. "The fact that Picard was willing to settle with Wilpon doesn't mean he wants to settle with someone else."

Picard has shown by settling with the Mets' owners that he "is a man of common sense," Sabino added. "But Mr. Picard is not afraid of anybody. He has tremendous resources."