The judge overseeing the Bernie Madoff trustee’s $386 million “clawback” lawsuit against the Mets said he will make a decision by March 5 on whether the case will proceed to trial.
Lawyers for Fred Wilpon and Saul Katz had asked U.S. District Court Judge Jed Rakoff at a hearing in Manhattan federal court on Thursday to dismiss the case, saying trustee Irving Picard has failed to prove the Mets owners knew Madoff was running a massive Ponzi scheme or that they had willfully turned a blind eye before Madoff’s scheme collapsed with his arrest in 2008. The suit is scheduled to go to trial on March 19.
“No defendant acted in a willfully blind manner,” said Wilpon and Katz attorney Karen Wagner. “These defendants trusted Madoff. They had reason to trust Madoff. The trustee argues there was a motive (to ignore red flags raised by Madoff’s scam). We would suggest the motive argument is demonstrative of the way the trustee distorts evidence.”
Picard’s attorney David Sheehan, however, argued that the Mets owners were sophisticated investors who chose not to look critically at Madoff’s operation because their baseball team and real estate business were dependent on the returns.
“These are very sophisticated people,” Sheehan said. “It’s what they would have known which is the critical part. They made a conscious decision not to look because they didn’t like what they would find.”
Sheehan also asked Rakoff to award Picard the $83 million in “fictitious” profits the Mets owners earned from their Madoff accounts in the two years before Madoff’s arrest, saying the money belonged to other victims. Wagner said Picard should not be permitted to take the money because the $83 million was money owed by a registered investment broker to a client.
Rakoff also barred former New York City comptroller Harrison Goldin and another expert witness from testifying for Picard. Rakoff also said an expert witness for the Mets owners could not testify.
Picard hoped to recover $1 billion in principal and profits from the Mets owners, but Rakoff slashed that figure to $386 million, which includes the $83 million in fictitious profits.
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