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The Wilpons may save some money

May 14, 2010, 1:30 PM EST

No, not by cutting Jeff Francoeur into pieces and selling him for scrap, but by virtue of a law winding its way through Congress that could allow them to hold on to $48 million that, under current law, they might have had to forfeit as a result of their connection to the Bernie Madoff Ponzi scheme.

The law — the details of which are are much better spelled-out in Dan Freed’s column at TheStreet.com — would prevent trustees cleaning up after Madoff-like scams from from collecting earlier investors’ “gains” and redistributing them to later, less lucky investors.  Such a move is called a clawback, and this proposed law would limit the maneuver. The Wilpons actually came out of the Madoff scam with a bit more money in their account than they
started with — $48 million, actually. Under present law, they’d be subject to clawbacks. If the law passes, the Wilpons will likely be in the clear.

Which isn’t necessarily an injustice or anything. On a very basic level, the Wilpons were victims just like the other investors. That they happened to be in earlier than others and thus got the benefit of Madoff’s phony investment gains as opposed to getting the shaft is not their fault. And besides, just because they got more money back than they put in doesn’t mean that they weren’t losers too. Indeed, they thought they were doing way better than their $48 million gain they got and likely structured their lives and businesses accordingly.  Because of this sort of thing clawbacks are controversial and problematic.  I can’t really speak to the merits of this particular law (I’m a bit out of my depth here), but the beliefs that clawbacks often work to unwittingly unjust ends is pretty widely held.

But I do know this much: as things currently stand, the Wilpons, if they have a bit of business sense, have $48 million mentally socked away to be given up in clawbacks later. If the law passes, however, it will be theirs to spend once again.

Maybe — just maybe — they’ll spend it on the Mets. 

  1. jimbeetle - May 14, 2010 at 6:11 PM

    Hmm, that might be good for other folks, but would it add a wrinkle or two if Bernie’s wife Ruth was actually a partner in a firm subject to a clawback?
    “Mr. Picard also identified payments that were made to investment partnerships partly owned by Mrs. Madoff, including the private equity firm Sterling Equities, which owns the New York Mets and Brooklyn Cyclones baseball teams, and the Delta Fund, the complaint states.”
    http://www.nytimes.com/2009/07/30/business/30madoff.html?_r=1
    Ain’t no lawyer, but if I correctly read this, Ruth was at least partly a partner in the firm that received the payments. Might there be some exceptions to the new deal for cases such as this? The would appear to be a good basis for one.

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