NEW YORK - Fred Wilpon and Saul Katz, the owners of the New York Mets, settled the federal lawsuit brought against them by Irving H. Picard, the trustee for the victims of Bernard L. Madoff’s Ponzi scheme, for $162 million on Monday.
Picard, in turn, dropped all claims that the men turned a blind eye to warnings that Madoff was operating a fraud during their many years of investing with him.
The agreement, which must be approved by the court, is a significant victory for Wilpon and Katz.
In addition to no longer having to fight a costly and damaging legal battle against a well-heeled opponent, they are now obligated to pay a fraction of the $1 billion the trustee originally sought.
Wilpon and Katz, and their families and businesses, will not have to pay much money, if any, out of pocket. Instead, they will now be eligible to receive up to $178 million from the billions of dollars that the trustee collects from the net winners.
If they get the full recovery within three years, $162 million of it will go to the trustee; if not, Wilpon and Katz are responsible to pay the rest over the fourth and fifth years.
Wilpon and Katz, speaking outside the Manhattan federal courthouse, said they were relieved by the settlement because it would allow them to get back to running their businesses and because the settlement affirmed that they had acted in good faith.
The settlement of $162 million represents the amount of fictitious profits that Wilpon, Katz, and their associates withdrew from their Madoff-related accounts over the six years before the liquidation of Madoff’s businesses.
The figure includes the $83 million that the Mets owners had already been ordered to pay the trustee by Judge Jed S. Rakoff of US District Court.
David J. Sheehan, counsel to Picard, said the chances of recovering all the money from the Mets owners was good, and it would allow the trustee to spend more time trying to recoup money from hundreds of other net winners.
Jury selection in the trial had been scheduled to begin Monday after more than a year of acrimonious court filings and hearings.
Mario M. Cuomo, the former New York governor who has been mediating high-profile disputes for decades, played a prominent role in mediating this settlement.
Outside the courtroom, Cuomo said the closer the two sides got to trial, the stronger the imperative was for them to settle.