Blog Entry

Owners should prevail, unless jury has Mets fans

Posted on: March 6, 2012 2:51 pm
Edited on: March 7, 2012 7:17 am

PORT ST. LUCIE, Fla. -- The Mets suffered their first loss of what could be a very long season when bankruptcy court Judge Rakoff ruled Monday that team owners Fred Wilpon and Saul Katz must pay back up to $83 million in Madoff profits. Further, he ruled that they must stand trial for another $303 million. So the drama and unrest continues, into the baseball season.

Madoff overreaching trustee, Irving Picard, originally sought $1 billion from the Mets owners, so from that standpoint, Wilpon and Katz are already ahead of the game. But to no one's surprise, people close to the case suggest a loss of even $386 million could put their ownership in peril.

Beyond the immediate loss of up to $83 million and upcoming trial, the other bad part for Wilpon and Katz is that the case of their baseball lives is going before a jury. One thing they say about jury trials, they are unpredictable. The other thing about this jury trial, the jury could be made up of angry Mets fans.

Seeing what's happening on the field, Mets backers aren't in a very good mood these days. Wilpon contended when the Madoff story broke that their investment in him wouldn't affect their beloved team, but Mets fans know by now that most of their money is going to the owners' lawyers, not their outfielders, infielders, pitchers and catchers.

Wilpon and Katz have taken the payroll down an unprecedented $50 million. What's left on the hole-filled roster are veterans who have been disappointments in recent years and a whole bunch of kids with varying degrees of promise. Their $90-million payroll and limited talent doesn't become any major market, much less New York.

One piece of positive news for the Mets owners is that Judge Rakoff, a brilliant veteran jurist, signaled that he doesn't believe Picard has much of a case here for the next $303 million. Rakoff even tweaked Picard for producing more "bombast'' than "bombshells'' (Rakoff apparently has a writing touch), and indeed it appears Picard's case for "willfull bilndness'' by the Mets owners appears woefully weak.

There is no smoking gun, no e-mail from Wilpon or Katz suggesting they knew a thing about what Madoff was up to. That Picard found one or two or even three employees who suggested they thought (but don't know) Madoff might not be on the up-and-up isn't nearly enough. The former employee Noreen Harrington, who said she warned Katz, appears to have been prescient. But even she said she admitted to Katz she couldn't prove what Madoff was up to. (Katz claims not to recall the conversation.)

Picard may think Wilpon and Katz were knowledgeable investors, but there is no evidence they were. Real estate (and baseball) is their game. They obviously know real estate. (As for baseball, I'll leave that up to you).

There is not a scintilla of evidence they knew more about securities than all the 4,000-plus folks who foolishly invested their money with an epic scam artist. Madoff was obviously a very good con man. He fooled all this people plus the banks plus the SEC. Obviously a few folks knew. The crook who wound up dead in his pool in Palm Beach obviously knew; he got a 900-percent return from Madoff one year. His widow fairly turned over several billion dollars to Picard.

The Wilpon-Katz gains were generally in the 10-to-15 percent range per year, which is exactly what the rest of the rubes got. There is no evidence Madoff was paying them extra to be silent partners. And just because they saw each other at the country club or on the Long Island Railroad doesn't mean anything. Neither does it if the Wilpon and Madoff families vacationed togethers. As Rakoff said, where's the bombshell?

There is nothing to prove Wilpon and Katz were any different from the rest of the 4,000-plus dupes who knew nothing about stocks, bonds or investing. As many people should know, there is ZERO chance a securities investor can make 10-15 percent every year for decades without a single down year or even very much variation. It just isn't possible, as Harrington told them. Even Warren Buffett has down years. Even if he averages a whopping 20-percent a year for decades, that includes significant variation and some down years.

To say Wilpon and Katz should have known is silly, and a waste of breath. They ALL should have known. The SEC should have known. They are paid to know such things. But they, too, were duped by Madoff, who was seen as a pillar of the community.

Wilpon and Katz made their money by being aggressive and tough. Katz has big stones. (In his famous quote in the New Yorker article by Jeffrey Toobin, he boasted of having "big balls," something he didn't dispute when I questioned him about that quote earlier this spring. Though he did say that this is why he doesn't talk much to the media, and the smoother Wilpon does). I have known these guys for years, and I find it easy to believe that they knew next to nothing about investing in stocks. Like the others, they were fools (though perhaps fools with bigger balls in one case). They probably got a bit greedy, like when they gave Bobby Bonilla deferred payments for decades because they saw Madoff as a sure thing. But being greedy and crooked are two different things.

There is nothing to suggest Wilpon and Katz are crooks. But unfortunately for them, a jury of Mets fans may not see it exactly that way.


Since: Dec 18, 2007
Posted on: March 8, 2012 8:06 am

Owners should prevail, unless jury has Mets fans

Jesus warned us about the moneychangers.  Read the story.  It's a good one and very relevant to this subject.

Since: May 31, 2010
Posted on: March 7, 2012 7:55 pm

Owners should prevail, unless jury has Mets fans

I have no love lost for the Mets owners - they are ruining the team - but Picard is a shakedown artist. I hope they prevail at trial.

Since: Aug 4, 2009
Posted on: March 7, 2012 7:18 pm

Owners should prevail, unless jury has Mets fans

I'm a Mets fan and I hate what the team is going through right now. But when you talk about crooks no one is talking about the guy who's leading the parade, Picard. This guy is charging over $800 bucks an hour PLUS expenses. He and the law firm he works for have already billed the goverment for over $280 million dollars in fees and the real victims, those who lost everything, have barely received anything back. Makes you wonder who the real crook is.

Since: Jan 17, 2008
Posted on: March 7, 2012 3:11 pm

Owners should prevail, unless jury has Mets fans

As you can tell from my name here I am not a Met's fan but I will defend the honesty of thier owners. You also should always consider the source, in this case the trustee appointed by the Bankruptcy Court, Irving Picard

No one has ever accussed the Met's owners of being brilliant. When you look around the world of sports and see how some clubs are run you have to question how did some people who are obviously so stupid, at least when running a sports franchise, ever make enough money to be able to buy a team.  Orioles fans for one  know what I am talking about.

When one invests large sums of money they usually get  larger returns on it than those who make small ones. If you read the financial pages you will see this all the time even in today's economy. 

If you have followed the Madoff mess from the begining you would know that Picard as always made grandious claims against all the investors who he had any chance of collecting a dime from. His only concern however seems to be the fees he generates for himself and his law firm. This from a Congressman's news letter of last summer  

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;  "A federal watchdog agency has agreed to investigate allegations that Irving Picard, the trustee charged with liquidating Bernie Madoff's estate, is punishing the Ponzi scheme scammer's victims by filing "clawback" lawsuits, Rep. Scott Garrett (R-N.J.) announced Wednesday.

The "comprehensive evaluation" of Picard's work as the Madoff trustee will also include a review of the legal investigative costs Picard and his firm,
Baker & Hostetler, have incurred during the cost of the  investigation.

"Defrauded investors - whom the government failed to protect in the first  place - are terrified of being victimized once again," said Garrett, the
chairman of the House Financial Services Subcommittee on capital markets. "I look forward to reviewing the GAO's findings."

In a June 3 letter, Garrett and several House colleagues - Rep. Carolyn McCarthy (D-N.Y.), Rep. Peter King (R-N.Y.) and Rep. Ileana Ros-Lehtinen
(R-Fla.) - asked U.S. Comptroller General Gene Dodaro, who heads the Government  Accountability Office, to launch the investigation.

Nikki Clowers, the GAO director of financial markets, confirmed that the agency had agreed to embark on an investigation into Picard but declined further comment. "


Since: Oct 8, 2006
Posted on: March 7, 2012 12:16 pm

Owners should prevail, unless jury has Mets fans

Duped?  Oh, I don't think so.  The weak argument put forth by the author is laughable.  Somehow, individuals capable of amassing the fortune necessary to buy a baseball team were duped into thinking that a steady 10-15% return on investment is normal.  And we should buy this, because real estate is not investing.

Mmm.  I guess Barry Bonds was duped, too, into thinking some lotions were perfectly okay and that 70+ home runs are normal.  And we should buy that because baseball is not biochemistry.

There is *everything* to suggest that Wilpon and Katz are crooks.  The return rate on investments alone is suspicious, and questionable.  Do you think any investor at that level is not going to want to see *how* this is possible?  That they, who are in business of analyzing deals from every angle to ensure an advantage, are going suspend disbelief because Madoff said so, is preposterous.  They were given plausible deniability.  In other words, willfully ignorant.

Since: Sep 12, 2006
Posted on: March 7, 2012 11:52 am

Owners should prevail, unless jury has Mets fans

All the previous comments are hilarious. Lol.. Seriously though, as a Yankee fan I'm not taking any joy in what's going on with the Mets. It sucks. I like the Mets and have gone to games at Citi Field. The Mets went through a bad spell in the mid-late '70s, and they actually had good pitching. I think the Mes will get through this bad patch and return to respectability. It won't happen overnight, but it will happen. I liken the situation to the movie the "Shawshank Redemption". Once they get through all the crap, they will come out free & clean. You just got to hang in there and wait it out. Also, I like the decision to remove the black from their uniforms. A small step, but a step in the right direction. Keep your heads up Met fans...

Since: Sep 11, 2011
Posted on: March 7, 2012 12:12 am

Owners should prevail, unless jury has Mets fans

If i get on the Jury , I just want to know can I give Wilpon. Life ?

Since: Feb 1, 2011
Posted on: March 6, 2012 7:30 pm

Owners should prevail, unless jury has Mets fans

Probably in about 20 years from now, Moneyball might just got itself a sequel.....

Since: Aug 24, 2008
Posted on: March 6, 2012 4:40 pm

Owners should prevail, unless jury has Mets fans

Surely you jest!

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