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Judge rules that the Mets owners have the burden of proof in the upcoming Madoff trial

Mar 14, 2012, 6:23 PM EDT

Image (1) Mets%20Logo.png for post 3903

Jim Forkin of CNBC reports the judge in the upcoming Madoff/Wilpon/Mets trial ruled this afternoon that it is the defendants — meaning the Mets owners — who have the burden of proof. Not the bankruptcy trustee.

This is a pretty big deal.  I haven’t seen the exact ruling, but it would seem that rather than forcing trustee Irving Picard to prove that the Mets owners were willfully blind to Madoff’s scheme while investing with him, it is now on the Mets owners to prove that they didn’t know that it was a scam or, that they behaved prudently at all turns or something along those lines.

The exact bogey they have to meet is key here. Depending on how it’s phrased, it could put the Mets owners in a prove-a-negative situation, or something close to it.

No matter what it is, however, it’s way easier to play defense than offense in these things, and thus the case just got that much tougher for Fred Wilpon, Saul Katz and the Mets.

  1. ikedavisnose - Mar 14, 2012 at 7:09 PM

    God I hope they sell

  2. drewsylvania - Mar 14, 2012 at 7:27 PM

    Or get forced out with little more than the shirts on their backs.

    • Jonny 5 - Mar 15, 2012 at 8:43 AM

      Speaking of shirts maybe they can hand out Underdog shirts to their legal team for shits and giggles too?

  3. bigharold - Mar 14, 2012 at 7:27 PM

    I continue not to get it. If the Wilpon’s were as culpable as Picard is suggesting why were hey not charged? I would think that the SEC, who was warned and investigated him twice, should be sued.

  4. randygnyc - Mar 14, 2012 at 7:41 PM

    I think this ruling will be appealed.

  5. sdelmonte - Mar 14, 2012 at 7:42 PM

    How can a judge decide that one side or the other has the burden? Explain it to me, Mr. Lawyer.

    • Craig Calcaterra - Mar 14, 2012 at 7:48 PM

      It sort of happens in all civil cases. Some defenses are affirmative defenses that require the person who is making the defense to prove the elements of it. Others are situations where if the plaintiff proves x, then the burden shifts to the defendant to prove “not x” or “but y.” It just depends On the laws in play and stuff.

      • lardin - Mar 14, 2012 at 8:43 PM

        Kind of like justifiable homicide, the defendant has to prove the shooting was justified.

      • protius - Mar 15, 2012 at 3:09 AM

        Mr. Calcaterra, you wrote: “Depending on how it’s phrased, it could put the Mets owners in a prove-a-negative situation.”

        You also wrote: “it’s way easier to play defense than offense in these things.”

        Wouldn’t you say that proving a negative is playing defense?

      • sdelmonte - Mar 15, 2012 at 4:27 AM

        Interesting. Confusing, when you are used to criminal law proceedings as your court case news, but interesting. Can’t remember ever seeing a single episode of The Practice with such a ruling, either, but I know better than to go to TV for legal education.

      • Kevin S. - Mar 15, 2012 at 8:17 AM

        I think he means offense as having to make the case and defense as reacting to your opponent trying to make the case, protius. In that framework, proving a negative would be the defense playing offense.

      • paperlions - Mar 15, 2012 at 8:45 AM

        Exactly. Whoever bears the burden of proof is on offense.

      • protius - Mar 17, 2012 at 8:40 AM

        Kevin S., thank you for standing in for Mr. Calcaterra, and making a clear and concise point.

  6. Baseball Beer Burritos In That Order - Mar 14, 2012 at 8:03 PM

    This is great news.

  7. The Rabbit - Mar 14, 2012 at 8:10 PM

    Same point I made in previous posts.
    If they are principals in an investment company, soliciting outside investors (not just trading their own account), and as such, if they hold SEC and NASD licenses, they are required to “exercise due diligence”.
    So, if you are corrrect regarding the implications of judge’s comments, I’m guessing they do hold securities licenses and therefore would properly be held to a higher standard than the average investor.
    In other words, they have to prove that they did the work that was required of them as licensed brokers.

    This is, of course, raises another issue: If in fact they are licensed securities brokers and the Court rules that they didn’t exercise due diligence, if they solicited outside investors for fees/commissions and offered investment advice, they would be in violation of NY State and federal securities laws.
    In my professional life, I’ve seen “nobodies” fined and had license revocations for this. I can’t imagine the State of NY would let something this high profile pass.

    • lardin - Mar 14, 2012 at 8:47 PM

      Also Picard has a witness who will testify that she was hired by Wilpon/Katz and she reported to them that his numbers were impossible to duplicate, and most likely was not kosher. They fired her and never looked into her allegations

    • bigjimatch - Mar 15, 2012 at 10:25 AM

      “If they are principals in an investment company, soliciting outside investors (not just trading their own account), and as such, if they hold SEC and NASD licenses, they are required to “exercise due diligence”.

      In making the ruling that the Wilpons would not be liable for the full $1 Billion the Trustee initially sought, the judge ruled that the Wilpons were not principals in an investment company, so they had no due diligence requirement, which is why the standard is “willfull blindness” and not negligence or some lower standard. The Wilpons are being treated as ordinary investors who “may” have been privy to the fact that Madoff was running a ponzi scheme.

      They fact that this lady (correctly) pointed out that something was not Kosher is evidence of willful blindness, but not indisputable. Wilpon will surely counter by saying something to the effect of the SEC found Madoff to be Kosher, and they believed the SEC.

      • The Rabbit - Mar 15, 2012 at 3:09 PM

        “In making the ruling that the Wilpons would not be liable for the full $1 Billion the Trustee initially sought, the judge ruled that the Wilpons were not principals in an investment company……. The Wilpons are being treated as ordinary investors who “may” have been privy to the fact that Madoff was running a ponzi scheme.”

        Thanks for the update. I appreciate the info. I had not seen the ruling which is why I qualified all my comments with “if”.

        Sadly, I agree with you completely in regards to your statements in the last paragraph.

      • heynerdlinger - Mar 15, 2012 at 7:52 PM

        Does the SEC routinely reveal their investigations when they don’t take legal action? It’s my understanding that there was never any public assertion from the SEC that Madoff was on the up-and-up. The claims that the SEC didn’t find anything have so far been to suggest that if the SEC with all their lawyers and governmental powers couldn’t find anything, why would guys like Wilpon be expected to do any better?

        That’s a lot different than, “Hey, I saw the SEC report and believed what it said.”

  8. cool10857 - Mar 14, 2012 at 9:00 PM

    I pray that the Wilpons get hammered in this litigation and are forced to sell the Mets.

  9. bbk1000 - Mar 15, 2012 at 7:33 AM

    This is good news for Mets fans.

    Any “fan” that wants the Wilpons to keep the Mets is not a fan of the team. The best news we could get is that the Wilpons are forced to sell the team.

    I’m hoping the seats are empty this year as well, please people, stay away. If you feel the need to go to a game get a root canal instead, the pain will be the same.

    • bigjimatch - Mar 15, 2012 at 10:15 AM

      Wilpons aren’t selling the team even if they lose. The Wilpons would rather lose their real estate investments than the team. If they lose, it will just mean more lean years for the Mets, not new ownership.

      • Reflex - Mar 15, 2012 at 2:03 PM

        Bankruptcy is funny about not caring about what you want to keep and what you do not, and simply divesting you of your most valuable assets in order to meet your financial obligations…

      • bigjimatch - Mar 20, 2012 at 3:24 PM

        They are not filing for bankruptcy. They would sell real estate holdings before being forced into bankruptcy and losing the team.

  10. mrznyc - Mar 15, 2012 at 8:29 AM

    If Selig forced the Dodger sale because he was all that worried about the good name of MLB? Where is he now that we need him with the Wilpon mess. To my knowledge, McCourt was never charged with anything and Bud forced him to sell – Here are owners who are running one of the most visible franchises into the ground and he’s doing nothingl

    • paperlions - Mar 15, 2012 at 8:54 AM

      That isn’t why McCourt was forced to sell. McCourt was out of money and either MLB was going to have to start paying his bills or he was going to file for bankruptcy. MLB’s involvement in the organization was to prevent McCourt from stipping the organization of every last dime before his inevitable bankruptcy occurred. Despite the generally horrible stewardship of the Mets by the Wilpon’s, there is still no indication that they use the team as a piggy bank.

  11. bigjimatch - Mar 15, 2012 at 10:14 AM

    Reviewing the Judge’s (short) order, it looks like the Wilpons will have to prove that they weren’t “willfully blind” to the scam, which is a little easier than proving that they did not know it was a scam. The Judge is expected to provide a more thorough ruling on this issue when he publishes a full decision on the Summary Judgment motion.

    My take is that the Wilpons have always gotten a worst wrap than they deserve. They have always been amount the top 5 teams in payroll, usually closely bunched with teams 2-4, with the Yankees blowing everyone away. They spend on big money contracts like Johan (which nobody was complaining about when they signed him), and Bay (which didn’t look like a terrible deal when they got him for 4 years). Also, the 2006, 2007, and 2008 nine teams were all picked by many to win the East and possibly make it to the World series at the beginning of their respective years. The deals didn’t work out and they didn’t win a world series, but it is not like they weren’t trying. Even last year, the payroll was $145MM.

    Many Mets fans have clamored for Cuban (who went a long time before his team did not under perform in the postseason) or Trump (who has zero sport experience and has had several business venture fail) to buy the team, but there is no guarantee they would be better.

    That being said, if they are not in a position to be in the top five in payroll, they need to sell the team to an ownership that can invest in a proper payroll. If you are going to high ticket prices, then you need to have a high payroll.

    But the fact is, I think they will be able to keep the Mets even of the Wilpon group looses the full $386MM (which I doubt they will) and run it on the cheap until the economy and real estate prices pick up. In the end, I don’t think they are selling no matter what, so I guess I hope they win and are able to start putting money back into the team.

    • umrguy42 - Mar 15, 2012 at 11:24 AM

      Actually, Trump was involved in helping to run the USFL into the ground. Smart Mets fans would probably be wise to want Trump to stay away…

    • bbk1000 - Mar 16, 2012 at 5:48 PM

      Between real estate and Madoff I’m thinking all the Wilpon’s cash source was artificially inflated…

      Either way they lost their Madoff magic money so payroll will be shrink, expect 70 – 80 mill a year at best for the next 5 years…could be lower.

      They still have $’s owed to players long gone.

      This team is a mess…..come to Citifield aqnd meet the Mess…

      • bigjimatch - Mar 20, 2012 at 3:27 PM

        Between the real estate crash and Madoff, thier net worth is no where near where it was before 2007. However, all of their business interests a private, so no one knows how much money they have because here are no reporting requirements. Frankly, I don’t care how much money that have, as long as the Mets payroll is appropriate, which is the top 5 in baseball.

      • bbk1000 - Mar 20, 2012 at 4:57 PM

        I don’t see that happening with Alderson, but I hope I’m wrong.

        I hate the Wilpons so much it’s rubbing off on a team I have followed for 40 years….it’s just bad.

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