NEW YORK - The trustee recovering money for investors swindled by Bernard Madoff may need a perfect pitch to a jury Monday to force the New York Mets owners to pay up to $303 million to repay victims cheated of billions of dollars during the financier’s decades-long fraud.
US District Judge Jed Rakoff has said he is skeptical that lawyers for Trustee Irving Picard can succeed in convincing a nine-person civil jury that the Mets owners believed that Madoff’s business was a fraud but continued their investments anyway because they were making a lot of money. Lawyers for the owners insist their clients had no idea the former Nasdaq chairman was cheating thousands of investors of their roughly $20 billion investment for at least two decades.
The judge already has ruled the team’s owners must pay up to $83.3 million, representing fictitious profits they received from Madoff.
But another ruling blocked Picard from trying to collect the full $1 billion he sought to recoup in a so-called clawback lawsuit he filed against the Mets owners. It was one of hundreds of lawsuits he used to force those who profited from their investment to pay into a fund established to pay back those who lost money.
The uncertainty about how much Mets co-owners Fred Wilpon and Saul Katz must ultimately give up has damaged the team’s financial picture, forcing it to slash payroll and try to raise tens of millions of dollars by selling small chunks of the team, though Wilpon, the Mets’ chief executive, said several weeks ago that the current owners plan to keep the franchise “for a very long time.’’
Wilpon tapped one of his childhood friends, Dodgers great Sandy Koufax, to testify about Wilpon’s intentions. Koufax invested in Madoff’s private investment business at Wilpon’s urging.
Lawyers for Wilpon wrote that it “strains credibility to think that Mr. Wilpon would expose his oldest and closest friend to potential financial ruin - for no benefit to Mr. Wilpon himself - if he subjectively believed that Madoff Securities might be operating a Ponzi scheme.’’
The legal term in play is ‘willfully blind’ - did profits trump signs of trouble?
The legal term in play at the Manhattan proceeding is “willfully blind,’’ a standard the jury will use to determine whether Mets owners ignored warning signs of trouble.
Lawyers for the team’s owners say they did not and they note that the Securities and Exchange Commission failed to unearth the fraud, despite numerous looks at Madoff’s operation.
Picard’s lawyers wrote in court papers that the SEC inaction is irrelevant. They noted the SEC did not “enjoy a 20-plus year personal - and more than one billion dollar investment - relationship with Madoff, with unique access to him.’’
Except for testimony by the Mets owners and a possible appearance by Koufax, the trial getting under way Monday will border on the tedious at times, with plenty of attention paid to financial documents in a search for what the Mets owners knew about their investment.
One key player who will not appear is the 73-year-old Madoff. He is imprisoned in North Carolina, serving a 150-year sentence.