The New York Mets’ owners must pay as much as $83.3 million to a trustee in advance of a trial to determine the team’s level of involvement in the Bernard Madoff Ponzi scheme.
Jed Rakoff of the U.S. District Court for the Southern District of New York in Manhattan, in a partial summary judgment, ordered a trial to begin March 19, with up to $303 million at stake for the ball club.
Rakoff added that he was skeptical whether trustee Irving Picard could prove the Mets acted in bad faith, and questioned whether evidence the parties offered on summary judgment were admissible.
“In short, the principal issue remaining for trial is whether the defendants acted in good faith when they invested in Madoff Securities in the two years prior to [Madoff’s] bankruptcy or whether, by contrast, they willfully blinded themselves to Madoff’s Ponzi scheme,” Rakoff said in a four-page ruling.
Picard is seeking to recover funds in relation to the scheme by Madoff. Picard alleges the team’s owners, Fred Wilpon and Saul Katz, received $83.3 million in fictitious profits and $301 million in principal in the two years before the bankruptcy filing pertaining to the Madoff assets.
“We are preparing for trial,” the Mets’ holding company, Sterling Partners, said in a statement. “We look forward to demonstrating that we were not willfully blind to the Madoff fraud.”
Wilpon said last week that the Mets are close to finalizing seven sales of minority stakes in the team, including four to partially team-owned cable network SNY. Mets ownership group Sterling Equities has also purchased two additional shares to increase the club’s liquidity. The Mets say they ultimately hope to sell 12 minority shares valued at $20 million each.
Madoff, who netted about $20 billion from victims in his scheme, was sentenced to 150 years in prison on June 29, 2009.
The financially ailing Mets took out a $40 million bridge loan in December. A year earlier, Wilpon and Katz received a $25 million loan from Major League Baseball. Bonds sold by conduit issuer New York City Industrial Development Agency paid to build Citi Field, the team’s replacement for Shea Stadium, which opened in 2009.
The agency sold $629.6 million of tax-exempt bonds secured by payments in lieu of taxes and $65.5 million of taxable bonds in 2006 and 2009 on behalf of Queens Ballpark Co.
