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Mets Settle with Madoff Trustee

Monday, March 19, 2012

A Bernard Madoff New York Mets baseball jacket is displayed during a press preview of a U.S. Marhals Service auction of personal property seized from Bernard and Ruth Madoff. (Mario Tama/Getty)

It was two outs, bottom of the ninth for the New York Mets baseball club. The team’s owners were facing a civil trial in federal court, slated to start Monday. But they’ve managed to pull off a last minute win — of sorts — a $162 million out of court settlement

The team’s owners reached a deal with the trustee responsible for recovering money for victims of the Ponzi scheme run by imprisoned financier Bernie Madoff.  The Mets owners had a decades-long history investing with Madoff. And when his fraud surfaced, they, along with thousands of other investors, lost money.

But Irving Picard, the court appointed trustee recovering funds for victims, said Mets owners Saul Katz and Fred Wilpon were sophisticated investors. He sued them, saying they knew — or should have known — about the fraud, and should have to pay back some of the profits they made from Madoff over the years.

But just before jury selection was to begin on Monday, David Sheehan, the attorney for Picard, told reporters both sides had reached a settlement.

“The most important thing is [that] the victims now will receive the benefit of $162 millions,” Sheehan said. “Ultimately that’s the goal of all the litigation brought by the trustee, is to enhance the fund for the victims.”

The Mets have at least three years to come up with that cash. But as Madoff investors, they're also trying to recover about $178 million they lost to the Ponzi schemer, so they may not have to pay anything out of pocket. The money the Mets owe will come out of claim recoveries that would have been paid to them by the trustee.

Attorney Helen Davis Chaitman has been following the case, and represents about 850 other Madoff victims. “The settlement does not require the defendants to write a check today at all,” Chaitman said. “All they are doing is assigning to Mr. Picard, their claim for that $178 million.”

Baseball is a superstitious sport, and the Mets haven’t won a World Series since 1986. On the courthouse steps Monday, it sounded like Mets President Katz was hoping a hex against the Mets had been broken. “Litigation is negative energy, so we are very pleased to have this behind us,” Katz said.

But it may take a bit more than a court settlement to break the Mets slump.

 “The Mets need probably about $200 million pretty quickly,” according to Wayne McDonnell, a sports management professor at New York University. “And that’s not going to have anything to do with the Madoff case by any means, it has everything to do with covering day-to-day operations, spring training expenses, payroll and other debt obligations that are baseball related.”

Many agree with McDonnell that the Mets are no match for that other New York ball club, the New York Yankees. They can't hit like them or spend like them, at least not anymore.

The team’s also been having trouble drawing crowds to home games.

Gary Shaffer lives in Park Slope. He still remembers listening to the Mets on a transistor radio back in the grade school in the 1960s.   The Yankees, he said, will never be his team. “In some ways I think people have almost had enough of them at this point, and there is that realization that the Yankees team has been put together and been successful because they can outspend everybody else,” Shaffer said.

That’s a claim no one could lob at the cash-strapped New York Mets. The team’s season opens April 1 against the Florida Marlins.

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