A Manhattan federal judge Friday allowed the trustee in the Bernard Madoff case to seek more evidence from the owners of the Mets for his $1 billion lawsuit against them.
Judge Jed Rakoff said he may take until the end of September to rule on a motion by Fred Wilpon and other owners of the team to throw out trustee Irving Picard's lawsuit. Picard sued the Wilpons, business associate Saul Katz and others last year in an effort to recover what the trustee said was $300 million in fake profits they received from Madoff's Ponzi scheme.
Picard also sued to recover $700 million of initial investment made by the Wilpons and their partners, contending that they knew or should have known Madoff was operating a fraud. The Wilpons deny they suspected anything was wrong before Madoff was unmasked.
While Rakoff showed skepticism about some of Picard's arguments over legally defining "willful blindness" in the face of a fraud, he did not tip how he might rule and went as far as to schedule the case for trial in March 2012. David Sheehan, counsel for Picard, said a trial would take about 10 days.
Karen Wagner, the attorney for the Wilpons, said Picard has not shown in the complaint that the Wilpons either knew or turned a blind eye to indications of fraud. Sheehan countered by saying one of the Mets owners' investment advisers, Peter Stamos, said Madoff's operation wouldn't pass his standard for placing investments.
Rakoff said the case raised enough unique legal issues that it should remain before him and not in bankruptcy court, where Picard originally filed suit.
As their ultimate financial exposure remains uncertain, the Mets' owners are trying to finalize a deal to bring in a minority partner, David Einhorn, and a $200 million cash infusion.
Picard and the Wilpons have been in mediation before former Gov. Mario Cuomo, who attended the hearing Friday and said the hearing might help both sides decide whether to settle or go to trial.
"This was a very helpful exercise," Cuomo said outside the courtroom.
A legal source familiar with the case said the two sides are far from a settlement.