The New York Mets owners filed legal papers Sunday disputing a court trustee's claim that they owe more than $1 billion because they should have known that their investments with Bernard Madoff were fraudulent.
In papers filed in U.S. Bankruptcy Court in Manhattan, Mets co-owners Fred Wilpon and Saul Katz and their investment fund, Sterling Equities, allege trustee Irving Picard made "false allegations" and omitted evidence favorable to the owners in order to force a settlement.
"The central allegations in the complaint are directly contradicted by sworn testimony taken by the Trustee's counsel prior to the filing of the complaint," Mets general counsel David Cohen said in a statement released Sunday.
On Friday, Picard filed new court papers he said showed the cozy relationship between Madoff and the Mets owners. He said the owners ignored warnings that Madoff's high returns might not be real.
But according to the 107-page Mets complaint, a Sterling official, Peter Stamos, testified that Madoff was "perhaps one of the best hedge fund managers in modern times."
"I said to Mr. Katz on a number of occasions that my assumption is that Mr. Madoff is the most honest and honorable man, among the most honest and honorable men that we will ever meet," Stamos said, according to the suit.
Wilpon and Katz said they did not know Madoff was engaged in fraud and that they received no warnings.
Cohen said Picard's complaint was filed in an "effort to extract a huge and unwarranted settlement with complete disregard for the harm that these misleading allegations would cause the reputations and businesses of the Sterling Partners."
David J. Sheehan, chief counsel to Picard, responded in an e-mail that said the defendants "are wrong on the facts and the law. The Trustee will prevail."
Madoff is serving a 150-year prison sentence after pleading guilty to federal fraud charges. He was arrested in December 2008 after revealing his fraud to his sons, who notified the FBI. Authorities say he took in about $20 billion from investors over more than two decades, failing to invest the money even as he sent them fraudulent statements indicating their money had more than tripled in value.
In January, Wilpon and his son, Jeff — the Mets' chief operating officer, announced they were exploring selling up to 25 percent of the franchise because of "uncertainty" caused by the lawsuit.
Fred Wilpon has said that sale of a controlling interest of the team is "not on the table" and has assured fans the team will have the resources to be competitive.