Bloomberg News

Mets Owners Should Be Barred From Questioning Fees, Madoff Trustee Says

March 13, 2012

Irving Picard, the trustee liquidating Bernard Madoff’s former firm, asked a judge to prohibit evidence about his fees at a trial over claims against the owners of the New York Mets baseball team.

Lawyers for the defendants in the Mets trial have sought to depose Picard and question him about his retention of the Baker & Hostetler LLP (1155L) law firm and whether “the trustee has any pecuniary incentive tied specifically to this litigation,” according to e-mails between Picard and Mets lawyers filed yesterday in federal court in Manhattan.

“To the extent that he does, that fact is relevant,” said Dana Seshens, an attorney for Mets owners Fred Wilpon and Saul Katz and a group of related defendants, in an Nov. 29 e-mail. Picard is a fiduciary for all Madoff customers, including the defendants, Seshens said.

Picard’s attorneys objected to the deposition, saying references to pecuniary motivation sounded like “harassment.” Picard and the law firm have charged about $273 million in fees for liquidating the Madoff firm since it collapsed in December 2008.

U.S. District Judge Jed Rakoff ruled this month that the Mets owners and related defendants must give up as much as $83 million in fictitious profits from Madoff’s Ponzi scheme and face a trial over whether they acted in bad faith, a decision that could cost them $303 million more, he said.

$386 million

The Mets owners had opposed a jury trial and tried unsuccessfully to get Madoff trustee Irving Picard’s remaining lawsuit dismissed after Rakoff cut it to $386 million from $1 billion. Picard’s lawyers had said they were confident a jury would find the Mets owners knowingly ignored the fraud because it benefited their businesses, which included real estate as well as the team.

Seshens didn’t immediately return phone and e-mail messages after regular business hours yesterday seeking comment on the trustee’s filing.

Picard must prove to a jury that the Mets owners and other defendants were willfully blind to Madoff’s scheme to recover the $303 million, representing principal they took from their Madoff accounts in the two years before the con man’s 2008 arrest, Rakoff said. The Ponzi scheme cost investors an estimated $20 billion in principal, according to Picard.

The trial is set to begin March 19.

Madoff, 73, pleaded guilty in 2009 to orchestrating what prosecutors called the biggest Ponzi scheme in history, and is serving a 150-year sentence in a federal prison in North Carolina.

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

To contact the reporter on this story: Karen Gullo in San Francisco at kgullo@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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