View this article online: https://www.insurancejournal.com/news/east/2012/03/19/239997.htm
The owners of the cash-strapped New York Mets baseball team agreed to pay $162 million to settle a lawsuit by the trustee seeking money for the victims of Bernard Madoff’s fraud, averting a potentially embarrassing trial.
The pact was announced in U.S. District Court in New York just as the trial was set to start. The trustee had accused the Mets owners of turning a blind eye to signs of Madoff’s fraud while enriching themselves as long-term investors in his funds — accusations the team’s owners denied.
“It’s a lovely day for a trial, but the parties have something else in mind,” Judge Jed Rakoff said on Monday morning as all the parties gathered in court.
Principal Mets owners Fred Wilpon and Saul Katz will not have to pay any money immediately. The terms of the pact call for payments over a five-year period, easing some of the immediate pressure on the Major League Baseball team’s finances.
For trustee Irving Picard and his team of lawyers, the settlement brings an additional $162 million into the pot to pay back former Madoff customers.
“In any settlement, nobody gets everything they want, but both sides got something,” former New York State Gov. Mario Cuomo, who oversaw mediation of the dispute, told reporters outside the courtroom. “This is common sense, there’s no artistry here.”
The settlement allows Wilpon and Katz to avoid having their business affairs spilled out in court. The trustee also may receive money for customers sooner than if the lawsuit continued to be fought in court.
The trustee has recovered about $9.1 billion so far through all of his litigation, although about $6.4 billion is unavailable due to appeals and reserves.
Madoff, who ran a multibillion-dollar Ponzi scheme over decades, is in prison after pleading guilty in the same courthouse three years ago.
He ran a Ponzi scheme in which many of his relatives and associates were lured to invest with the promise of steady high returns. Madoff paid old clients with the money from new investments and investigators found that the returns were fictitious.
Picard had accused Wilpon and Katz of ignoring warning signs that Madoff was running a fraud during their 25 years of investing with him. The owners countered that they did not know Madoff was running a Ponzi scheme.
“The settlement that we announced in court confirms that Mr. Wilpon and Mr. Katz and their partners acted at all times in good faith and did not act willfully blind,” said Robert Wise, one of their lawyers.
David Sheehan, the lead lawyer for Picard, told reporters: “This settlement is for the benefit of all the customers. Today, we enhanced the fund by 162 million.”
The settlement was reached on Friday, but kept secret until Monday. Rakoff scheduled April 13 for final approval of the deal. The case is Picard v. Katz et al, U.S. District Court, Southern District of New York, No. 11-03605.