By Evan Brunell
The Wilpons are nearing the next stage in the Madoff saga, with a March 18 deadline for the Mets owners to reach a settlement with trustee Irving Picard, charged with recouping losses from those who invested with Madoff and lost as the Wall Street Journal reports. The Wilpons claim they have been injured by the Madoff scam, but Picard is contending they do not have rights to ficticious profits and believe them to be "net winners." The Wilpons hauled in $300 million of false profits, and Picard is also seeking $700 million as a penalty, alleging the Wilpons willingly turned a blind eye to the Ponzi scheme.
While any settlement certainly is not likely to be $1 billion as termed in the lawsuit, the two sides may not be able to come to an accord even as the Wilpons scramble to find a minority investor that can shore up team losses and outstanding debts that would free up the Wilpons' ability to pay Picard whatever amount is decided upon y using their business assets outside of baseball. Over the next two weeks, MLB should approve around 14 bidders to win a stake of the Mets.
If no agreement comes by March 18, the Wilpons have been informed Picard will add more allegations to the lawsuit dealing with investments by the Wilpons and associates at Sterling Equities Associates, the owners' real-estate firm. Ex-New York governor Mario Cuomo is attempting to mediate the case.
"What the judge has asked and what the judge asks of all mediators is that you seek to create a solution that saves time, saves money and shortens or does away with litigation," Cuomo told the Journal. "That's what we'll try to do—that's the objective. The job of the mediator is to either find the road or make the road."
The Wilpons were set back on Thursday when a three-judge panel said they do not think the Wilpons should be allowed to keep $500 million in ficticious profits as the New York Post reports.
The Wilpons have contended they should be owed the monies as that is what was reflected on statements at the time Madoff's Ponzi scheme fell apart.
"From the investors’ perspective, the funds weren’t fictitious. ... All the law says is that they were entitled to rely on the statements," attorney Karen Wagner told the federal appeals court.
But judge Dennis Jacobs of the 2nd U.S. Circuit Court of Appeald disagreed, wondering if Picard should be making decisions according to "whatever amount Madoff made up while chewing on his pencil and looking at the ceiling."
Another judge, Pierre Leval, called figures on the statements as "figments of the imagination," something trustee lawyer David Sheehan wholeheartedly endorsed. "Who in their right mind would rely on the statements?" he said, telling the panel the Wilpons are not entitled to phony profits, only what they had poured into the accounts. "All that’s owed is what was put in," he said, calling the situation a "zero-sum game."
The panel ruled that victims only have rights to the principal amount of money invested as Madoff never actually did anything with the money. They will later rule on a legal challenge in bankruptcy court in whether the Wilpons, along with others who withdrew ficticious profits, should be forced to return these profits.
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