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The Wilpons are no strangers to Ponzi schemes

Jan 31, 2011, 9:31 AM EST

Fred Wilpon

Alison Cowan of the New York Times reports that the Bernie Madoff affair was not the first time the Wilpons have had to pay back money as a result of getting in early on a Ponzi scheme:

But for the owners, Fred Wilpon and Saul Katz, it is not the first time they have had their names and personal fortunes roughed up in a Ponzi scheme. An investment firm started by the two men had to pay back nearly $13 million two years ago when a hedge fund run by the scion of a wealthy New Orleans family collapsed in what was then regarded as one of Wall Street’s more brazen frauds.

I spent two years of my professional life defending a guy convicted of running a $50 million fraud, and part of that involved a number of mini-ponzi schemes and other assorted activities.  One thing I learned is that a great number of the victims of such schemes are people who really like the idea of getting rich quick and who, either out of simple negligence or out of willful blindness, are eager to give their money to someone who promises quick and/or outsized returns on investment. Yes, some people are truly innocent victims, with the fraudsters creating elaborate schemes which withstand a reasonable amount of due diligence by the investor. But often times people are willing to skimp on the diligence because they are so dazzled by the prospect of boffo returns.

I have no idea where the Wilpons fall in all of this.  But I do know that it’s not often that investors get burned by not just one, but two ponzi schemes. Especially allegedly sophisticated investors like the Wilpons.

  1. BC - Jan 31, 2011 at 10:40 AM

    Once could only have hoped that the Madoff deal completely wiped them out and they had to sell.
    We want Cuban in Queens!!!

    • lardin - Jan 31, 2011 at 11:03 AM

      If you think Selig will approve of Marc Cuban as an owner, I got a bridge in Brooklyn for sale!!!

      • Dan in Katonah - Jan 31, 2011 at 11:16 AM

        Too late, Wilpon already bought it.

  2. catsmeat - Jan 31, 2011 at 10:47 AM

    But I do know that it’s not often that investors get burned by not just one, but two ponzi schemes. Especially allegedly sophisticated investors like the Wilpons.

    Craig, these guys are gonna be paying Bobby Bonilla until 2035, and still owe Ollie Perez and Luis Castillo a combined $20 million in 2011. I would posit that the Wilpons are quite desirable marks for any up-and-coming Ponzi schemers.

  3. umrguy42 - Jan 31, 2011 at 11:19 AM

    What’s the old saying? “Fool me once, shame on you. Fool me twice…”

    • Dan in Katonah - Jan 31, 2011 at 11:21 AM

      … own the Mets?

      • ta192 - Jan 31, 2011 at 1:37 PM

        Nailed it…

    • scapistron - Jan 31, 2011 at 12:15 PM

      … ain’t never gonna fool me again.

  4. Brian Murphy - Jan 31, 2011 at 1:06 PM

    If you’re really desperate to kill time, doing a “Craig Calcaterra Tom Noe” search through Google is cute.

    • Craig Calcaterra - Jan 31, 2011 at 1:10 PM

      A lot of the best stories aren’t there anymore, sadly. But yeah, that was a trippy couple of years.

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