Bloomberg News

Mets Ruling Used as Weapon in Fighting Madoff Trustee Suits

September 30, 2011

(Updates with Picard demands in fourth paragraph.)

Sept. 30 (Bloomberg) -- A judge’s ruling that slashed a billion-dollar claim against the owners of the New York Mets three days ago is already being used as a weapon by other defendants in lawsuits brought by the liquidator of Bernard Madoff’s firm.

Safra National Bank of New York yesterday asked a bankruptcy judge to dismiss a suit by trustee Irving Picard, citing U.S. District Judge Jed Rakoff’s Sept. 27 ruling. Rye Select Broad Market XL Portfolio Ltd., based in the Cayman Islands, separately asked a federal district judge to take its Madoff suit out of U.S. bankruptcy court, citing Rakoff’s decision in the case against Fred Wilpon and Saul Katz.

Rakoff cut Picard’s claim against the Mets owners to about $386 million and raised the standard for him to get even that much. The judge said Picard could try to reclaim only two years of withdrawals from the Ponzi scheme, while dismissing nine of 11 causes of action against Wilpon and Katz.

Privately owned Safra, which is fighting Picard’s demand for about $112 million allegedly invested with Madoff through so-called feeder funds, said in a filing that “at a minimum” Picard’s demand for funds it took from the Ponzi scheme beyond two years should be dismissed. Rye, sued for $400 million, said its case involving swap transactions was similar to the Mets case, and that Rakoff sided with the defendants saying settlement payments were protected by so-called safe harbor law.

Payments Delayed

Rakoff’s two-year ruling could cost Picard about $2.7 billion on all his clawback suits, the trustee said yesterday. Another $3.5 billion of so-called preference payments was “in question” because of another aspect of Rakoff’s ruling. Picard’s first payments to investors totaling $272 million will be delayed, he said.

Picard, who has filed more than 1,000 suits to pay investors who lost money in the Ponzi scheme, will ask Rakoff for permission to appeal to the federal appeals court in New York. If Rakoff consents, the appeals court will decide whether to review the ruling.

Picard and his firm have charged more than $224 million for work since Madoff’s 2008 arrest. The con man is serving a 150- year sentence in a federal prison in North Carolina.

The Mets case is Picard v. Katz, 11-cv-03605, U.S. District Court, Southern District of New York (Manhattan).

--Editors: Stephen Farr, John Pickering

To contact the reporter on this story: Linda Sandler in New York at lsandler@bloomberg.net.

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net.


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