Bloomberg News

Judge Shouldn’t Aid Madoff Trustee Appeal, Mets Owners Say

October 24, 2011

(Updates with related lawsuits in fourth paragraph.)

Oct. 24 (Bloomberg) -- U.S. District Judge Jed Rakoff shouldn’t enable the liquidator of Bernard Madoff’s firm to appeal a ruling that cut a $1 billion case against the New York Mets owners by two-thirds, the team owners said.

Trustee Irving Picard assailed Rakoff’s ruling earlier this month, saying it “arbitrarily” allowed Fred Wilpon and Saul Katz to keep fictitious profits from the Ponzi scheme. Picard asked the judge to make a final ruling so he could appeal, or to allow an appeal before trial. The Major League Baseball team’s owners urged Rakoff to reject the request in a court filing.

“There is no hardship or injustice that would result from waiting another six months to raise any and all appealable issues at one time,” Wilpon and Katz said in the Oct. 21 filing in U.S. District Court in Manhattan.

Rakoff’s Sept. 27 ruling on the Mets case could affect investors in as many as 70 related lawsuits awaiting Rakoff’s attention, according to court documents.

Amanda Remus, a Picard spokeswoman, didn’t immediately respond to an e-mail seeking comment on the filing.

Rakoff last month set a March 19 trial date for Picard’s remaining case against the Mets owners after dismissing nine of 11 counts. He said Picard could try to take back two years of money withdrawn from the Ponzi scheme, or about $386 million.

Withdrawals that exceeded principal could be recouped if the trustee showed the team owners didn’t give “value” back, while for other transfers he would have to prove that the investors were “willfully blind” to the Ponzi scheme, Karen Wagner, a lawyer for the Mets owners, said in the filing.

Clawback Suits

Rakoff’s decision limiting Picard to two years of withdrawals may cost the trustee about $2.7 billion on all of his clawback suits, Picard has said. Another $3.5 billion of so- called preference payments is “in question” because of another aspect of Rakoff’s ruling, he has said.

The Securities Investor Protection Corp., which compensates Madoff investors for part of their losses, told Rakoff today that Picard was “equitable” in calculating how much of the money the Mets owners took from the Ponzi fraud should be returned to the confidence man’s estate.

“Changing the calculation only ensures a windfall for some customers and a shortfall for others,” SIPC said today in a court filing. Instead of imposing a two-year limit on clawbacks, “the court must consider all transfer regardless of timing,” it said.

Separately, Picard is fighting with Wilpon and Katz over whether he has a right to a jury trial. They say bankruptcy claims don’t carry a right to a jury trial.

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

--Editors: Stephen Farr, Peter Blumberg

To contact the reporter on this story: Linda Sandler in New York at

To contact the editor responsible for this story: Michael Hytha at

China's Killer Profits
blog comments powered by Disqus