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New York Times: the Wilpons were warned that Madoff wasn’t a sound investment

Feb 4, 2011, 7:33 AM EDT

CORRECTION Mets Sale Baseball

We may have actual legal documents from the case against the Wilpons as early as today, with both sides giving up all pretense of the conciliatory posture that occasioned the documents being sealed in the first place. The gloves are off and the bankruptcy trustee of the Madoff estate and the Wilpons are going at each other full-bore.

And the best thing about it for all of us is that each side has its own media operation: the New York Times is clearly getting passed information and spin from either the trustee himself or from someone sympathetic to his cause. The Daily News, in contrast, is clearly getting passed information and spin from either the Wilpons, their lawyers or from someone sympathetic to their cause. Unless you have a vested interest in the Mets or the Madoff debacle — and condolences to any of you who do — this is all great fun.

Today it’s the New York Times’ turn. Stung, it would seem, by being called lying extortionists by the Wilpons, Team Trustee provides the Times with some information that, if true, undercuts the Wilpons’ assertions that they were just as duped as anyone else by Bernie Madoff.

This comes in the form of a description of a lawsuit filed against the Wilpons last year by the widow of one of their former employees who lost a ton in their Madoff-invested 401K. In it she alleges that  multiple third parties — in one case the investment bank Merrill Lynch — made clear their concerns to Wilpon and his partner Saul Katz about investing with Madoff, yet they continued to invest with Madoff anyway, putting over 90% of the company’s 401K funs in Madoff securities.  The suit also alleges that Madoff had his own money invested with Wilpon’s company, thereby creating a conflict of interest on the part of the Wilpons when it came to deciding where the 401K money should go and how to invest it.

None of which is to say that the Wilpons were actively involved or even technically complicit in Madoff’s fraud. It’s merely to say that, unlike the other duped investors like Wayne Gretzky or Stephen Spielberg or whoever, the Wilpons were under totally different duties, subject to greater information and more closely-related to Madoff than anyone else who has been dragged into this case so far.  That’s what makes them different. That’s also what has them in the mess they’re in now.

I’m sure that the Daily News will counter this somehow. I’m sure a certain commenter who has been showing up in all the Wilpon threads will either echo those talking points or even have them before the Daily News does (uncanny, that!). Which is cool. All is fair in litigation and war. And, to be honest, I like the little back and forth we’ve been having in the comments section. Keeps everyone active and thinking.

But if the counter punch does come, it had better get a tad more refined. Because the more these allegations stack up — from disparate sources, not just the trustee — the less plausible the “Wilpon was totally blindsided by Madoff” line becomes.

And I’m not buying for a second that the Wilpons are in better shape now that settlement talks have broken down, which some are arguing. That’s simply ludicrous.  That is, unless you believe that having allegations splashed all over The Paper of Record that you screwed a widow out of her $300K retirement fund due to your negligence and conflict of interest to be a good thing. And unless you like your legal fees to shoot through the roof and your potential exposure to go from large-but-finite to “who the hell knows?”

  1. thelucasjj - Feb 4, 2011 at 8:26 AM

    How much joy do you think Frank McCourt feels each time another piece of this story comes out?

    • browngoat25 - Feb 4, 2011 at 8:52 AM

      I know there is/was a website called DodgerDivorce; I wonder if the will be a MetsMadoffMess.com coming out soon…

  2. mrznyc - Feb 4, 2011 at 9:29 AM

    When you add up the liabilities it becomes evident the Wilpons are gone. The 48 Million they received over the amount they invested with Bernie is chump change in all this. The Times reported that of the 15,000 accounts that Madoff had 500 were connected to the Wilpons (it looks like they were running a “feeder” opperation). Fred was one of the last people Bernie saw before the FBI locked him up so if any allegation that Fred had even a hint of what was going on then he’s going to be liable for every penny of his employees 401Ks which he lost with Madoff. Fred and Jeff have already borrowed 700 million against the Mets (Value 850 million). Fred and Jeff “invested” all the deferred money from his player contracts with Bernie. That’s all gone and the Mets are certainly liable for that money. They’re gone and I figure gone pretty quickly – It couldn’t happen to a nicer bunch.

    • BC - Feb 4, 2011 at 9:52 AM

      Hopefully Bonilla’s deferred money was with Madoff as well.

    • chrisny3 - Feb 4, 2011 at 10:15 AM

      “Fred was one of the last people Bernie saw before the FBI locked him up so if any allegation that Fred had even a hint of what was going on…”

      Nice of you to leave out that it was a meeting at Madoff’s office for the board of one of the charities Wilpon was involved in. That’s why he saw Madoff a few days before he was arrested. It wasn’t a social or even business call.

  3. BC - Feb 4, 2011 at 9:50 AM

    I will resist the urge to start another Mark Cuban For Grand Mets Poobah thread….

    • Old Gator - Feb 4, 2011 at 11:50 AM

      I won’t.

      Mark Cuban for Grand Mets Poobah!

      (This exhortation comes to you via mental dialysis unit, live from a pub in Charing Cross, where I’m supping on an ambrosial steak and ale pie.)

      • BC - Feb 4, 2011 at 12:06 PM

        Thank you. Someone had to say it.

  4. chrisny3 - Feb 4, 2011 at 10:11 AM

    “I’m sure a certain commenter who has been showing up in all the Wilpon threads will either echo those talking points or even have them before the Daily News does (uncanny, that!). ”

    LOL, Craig is referring to moi. Uncanny? Are you implying again I am on the inside? I can assure you I am not. I wish I were because it seems those who are are either very rich or stand to make a fortune on this.

    No, I am not on the inside of this case. A lot of what I wrote before the Daily News stories in which the Wilpons struck back came out is common LEGAL sense. I have some experience with the legal system and have lived with lawyers but that is the extent of my legal background. I am not a lawyer.

    Just being a fan in NY and having followed any of the sports teams here in the city, you know how the NY sports media likes to churn things up, wildly exaggerate, and even fabricate things. So I’ve got my radar up on that count all the time anyways.

    As per today’s new stories, it’s funny that the NYT’s alleges the Wilpons were warned by Merrill Lynch, but there are no specifics (unlike their coverage of the Picard lawsuit against Chase where they’ve actually revealed the type of evidence such as emails that would hold up in a court of law). No actual names, specific dates, emails or correspondence. It could be pure hearsay. Or even less.

    The Wilpons say there is no factual evidence to support Picard’s ludicrous claim that they knew or should have known about the scheme. And so far, none of the information Picard has leaked proves they did.

  5. chrisny3 - Feb 4, 2011 at 10:20 AM

    “And I’m not buying for a second that the Wilpons are in better shape now that settlement talks have broken down, which some are arguing. That’s simply ludicrous.”

    If it’s true Picard’s demands are ludicrous — as many are saying they are and I have no reason to doubt — the Wilpons halve little to lose by fighting back and could possibly end up owing less than what Picard is demanding. There also seems to be some solid legal precedent on which they are fighting back in terms of the New Times Securities case.

  6. fribnit - Feb 4, 2011 at 11:45 AM

    The Mets are a mess, have been for years. This is not going to help. Even as a Yankee fan I am feeling for Mets fans.

    I am wondering when it will be announced that the majority share of the team is up for sale.

    Mark Cuban huh? hum……

    • BC - Feb 4, 2011 at 12:08 PM

      Maybe if Cuban buys the team he can fix the access roads so I don’t have to drive two miles up Northern Boulevard and hook a u-turn to get onto the Van Wyck north to the Hutchinson Parkway. I haven’t figured a clean way out of there yet.

      • fribnit - Feb 4, 2011 at 4:07 PM

        AT least it is a really nice ballpark now. The drive still stinks but at least it is Citifield and not Shea that is the destination. Pity about the team though

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