The trustee recovering money for investors in Bernard Madoff's pyramid scheme filed court papers Friday saying the cozy relationship between the New York Mets baseball team and the Madoff family was demonstrated with a 2004 bridge loan for $54 million that the family provided the team's owners.
Trustee Irving Picard said in a new version of a lawsuit he first filed in U.S. Bankruptcy Court in Manhattan in December that Madoff made the interest- and cost-free bridge loan to the Mets' owners to aid the purchase of the broadcast rights for the Mets from Cablevision. Picard said the transaction was documented by a single-letter agreement on Mets letterhead that falsely described the loan as an "investment" by Madoff's wife in the company.
Picard in the latest version of the lawsuit also provided more detail about the more than $1 billion he is seeking from Sterling Equities, its partners and individuals including Mets owner Fred Wilpon and Saul Katz, the team's president and Wilpon's brother-in-law. Picard said they were net winners with their Madoff investments as they received favored status among thousands of investors in a private investment fund that Madoff managed. The court-appointed trustee said they ignored warnings that Madoff's high returns might not be real.
The lawsuit seeks to recover $140 million in principal and $133 million in fictitious profits that it said Sterling partners and their family members withdrew from 196 accounts kept with Madoff in the six years before the fraud was revealed. It also seeks $15 million in fictitious profits and nearly $54 million in principal withdrawn in the same period from 44 accounts in the names of various trusts created by Sterling partners.
The biggest chunk sought by Picard was $153 million in fictitious profits and $537 million in principal that he maintained was withdrawn from 65 accounts held by Madoff in the name of certain entities that were owned, form, funded, operated and controlled by Sterling Partners, the lawsuit said.
In a statement, Wilpon and Katz called the court papers "the latest chapter in the work of fiction created by the trustee." They added: "We will pursue a vigorous legal defense that will set the record straight and vindicate us."
David Cohen, general counsel for the Mets, called the new allegations "more nonsense from the trustee." He said the $54 million, representing funds the Sterling partners had invested with Madoff, was never used. He said the money was returned after one day because the funds necessary to complete the deal were received from Sterling's lenders by the buyout deadline.
In a release that accompanied his new filing, Picard said information about the bridge loan was included to provide additional substantiation of the inter-dependent relationship between Sterling and Madoff's investment advisory business.
The trustee said the bridge loan was documented by a single letter agreement that falsely described the loan as an "investment" by Madoff's wife, Ruth, in the company that would later become the SNY network.
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.