Madoff Trustee Sues Fred Wilpon, Mets Owner
Irving Picard, the Trustee appointed by the court to recover and distribute Bernard Madoff's assets, has filed suit in Bankruptcy Court against Fred Wilpon, owner of the New York Mets, and Sterling Equities, his real estate investment company ("Wilpon"). Mr. Picard claims that Wilpon withdrew more money than it deposited with Madoff, therefore actually making $48 million through "investments" with Madoff. Mr. Picard has filed several similar suits against those who have withdrawn more money than they deposited, and in fact, recently settled one of these suits for $625 million.
Although Wilpon and others challenged Mr. Picard's formula in the main action, Judge Burton Lifland decided that the calculation was the most appropriate manner in which to determine gains/losses (essentially, those who withdrew more than they deposited, claimed the Trustee should take into account their statements from Madoff which falsely showed significant investment gains, which they relied upon in withdrawing/spending their money, compared with those who deposited more than they withdrew, many of whom simply hope to regain some of their actual losses).
The suit against Wilpon was filed under seal, since Wilpon and Mr. Picard are apparently engaged in settlement negotiations. However, a class action lawsuit filed in July on behalf of participants in the Sterling employees' 401k plan (in which it is claimed Sterling breached its fiduciary duty to properly manage the assets of the plan, which were depleted because the assets were overwhelmingly invested with Madoff), a copy of which can be seen here, provides many interesting details.
Expect Wilpon to resolve both matters. Although Wilpon may not have been aware that Madoff's investment results were false, Mr. Picard will contend that he should have known that the results were unrealistic, and further, it is clear that the investment gains belong to other Madoff "clients" who were less fortunate than Wilpon in the Ponzi scheme. It would also not look good if Wilpon allows his employees' retirement funds to be wiped away, when he has made statements to the media that he and his family are "fine." Wilpon has until December 15, 2010 to answer the class action lawsuit filed in the Southern District of New York.
photos courtesy of coreynyc
My name is Christopher Fusco. I am the managing partner of Callahan & Fusco, LLC with offices in New York, New Jersey, and Pennsylvania.