I’ve been avoiding writing about Irving Picard, the trustee in charge of getting money for the victims of the Bernie Madoff Ponzi scheme, and his lawsuit against New York Mets owners Fred Wilpon and Saul Katz. It’s too painful. It’s like being close enough to see Oliver Perez’s face just as you know things are going to completely unravel but still hoping against hope that he’ll throw a strike. It’s like wondering if David Wright spends his nights crying softly while Mike Piazza texts him weekly updates on how many days he has until he’s an unrestricted free agent. I know what’s happening; I just don’t like to talk about it.
But, as we mentioned in Morning Docket, Picard’s massive complaint was made public today. He says Wilpon and Katz made $300 million in fictitious profits from business dealings with Madoff.
As you read through the allegations, try to remember how poorly the Wilpons make decisions about whom to hire, whom to fire, and how much to play baseball players — and then tell me if you are at all surprised by anything here…
The Wall Street Journal has a great summary of the 365-page complaint:
The baseball team itself had 16 Madoff accounts, from which more than $90 million in fictitious profits were withdrawn and used to help fund the team’s “day-to-day operations,” according to the suit filed by Irving Picard, the bankruptcy trustee recovering money for Madoff victims…
“The Sterling partners were simply in too deep—having substantially supported their businesses with Madoff money—to do anything but ignore the gathering clouds,” the suit said. “Despite being on notice and having every resource at their disposal to investigate the litany of legitimate questions surrounding Madoff, the Sterling partners chose to do nothing.”
Madoff wasn’t just a crucial financier of the Mets on the field; Wilpon’s real estate company, Sterling Equities, was also deeply involved with Madoff, the lawsuit alleges:
The Sterling partners had 483 accounts with the Madoff firm, including about 300 for themselves, their families and their trusts, according to the lawsuit. The rest were for close friends, employees and business associates, it said.
Mr. Wilpon and his Sterling partners used their investments with Mr. Madoff as collateral to obtain a “multitude of bank loans,” the proceeds of which were reinvested with Mr. Madoff, according to the lawsuit.
The Sterling businesses were so heavily invested with Mr. Madoff, they faced a “liquidity crisis” when Mr. Madoff’s fraud came to light in December 2008, the lawsuit said.
The Yankees had “The House that Ruth built,” and now have “The House that Steinbrenner built.” The Mets’ new home, Citifield, should be called “The House that Madoff built.”
Wilpon and Katz deny the allegations:
“The conclusions in the complaint are not supported by the facts. While they may make for good headlines, they are abusive, unfair and untrue,” Messrs. Wilpon and Katz said. “We categorically reject them. We should not be made victims twice over—the first time by Madoff, and again by the Trustee’s actions.”
Messrs. Wilpon and Katz said none of the Sterling partners suspected that Mr. Madoff was running a Ponzi scheme and their businesses never depended on returns from Madoff.
Sure guys. All is well. Pay no attention to the fact that the Commissioner of Major League Baseball handpicked our new GM because the team is critically mismanaged.
I’m so sad. How come I ended up rooting for the Bernie Madoff team? What did I do? I didn’t ask to be born in Queens. My Dad didn’t even like baseball; he played soccer. What the hell is wrong with me?
Anyway, as we’ve previously mentioned, reports indicate that Wilpon and Katz are currently trying to sell a minority stake in the team to put to rest any cash questions.
Madoff Trustee: Mets Owners Scored $300 Million in Phony Profits [Wall Street Journal]