Mets' owners call Madoff trustee suit 'fiction'

By Ben Rooney, staff reporter


NEW YORK (CNNMoney) -- The owners of the New York Mets fought back Sunday against the court-appointed trustee in the Bernard Madoff Ponzi case, saying his suit to recover $1 billion from them is a "work of fiction."

Fred Wilpon, Saul Katz and the partners of Sterling Equities said in a statement they have filed court papers in response to the suit from Irving Picard, the bankruptcy-court trustee who is trying to recover the billions in assets Madoff stole in his scheme.

"After months of damaging leaks, false accusations and withholding of evidence, we can finally legally respond to the work of fiction created" by Picard, the owners said in the statement.

The owners said they've moved to dismiss Picard's complaint.

Picard had previously accused Wilpon and Katz of reaping $300 million in fictitious profits from their dealings with Bernard L. Madoff Investment Securities. But in amended court documents filed Friday, the trustee charges that Sterling Equities, the Wilpon and Katz family business, received an additional $700 million in fraudulent transfers.

Picard's complaint alleges that Wilpon and Katz knew that Madoff was dishonest in his investment advisory business, and that his investment returns were "too good to be true."

But in their statement, the Mets' owners said they had no idea what Madoff was up to.

"Let us be very clear: we did not know that Madoff was engaged in a fraud," they said. "It's important to remember that before Madoff confessed his crimes, most of the world, including the SEC, viewed Madoff as a legendary Wall Street figure who was a pioneer in electronic trading and had served with distinction as the chairman of NASDAQ."

Wilpon and Katz had a "deep dependency" on the continuation of the Madoff fraud, according to David Sheehan, a lawyer for the Trustee and a partner at Baker & Hostetler LLP.

In one example of the close relationship between Sterling Equities and Madoff, the complaint says Wilpon and Katz accepted an interest- and cost-free $54 million loan from Madoff to pay Cablevision for the broadcast rights for the New York Mets.

According to Picard, the loan was documented by a fraudulent letter that described it as an "investment" by Madoff's wife, Ruth.

The complaint says Wilpon and Katz received fraudulent transfers from Madoff during a six-year period before the Trustee began liquidating Madoff's investment firm in December 2008. It also charges that Wilpon and Katz received "preferential transfers" in a three-month period after the liquidation proceedings started.

Sterling Equities is also charged with restructuring millions of dollars in debt at banks including Bank of America (BAC, Fortune 500), JPMorgan (JPM, Fortune 500), Citibank (C, Fortune 500) and others to "circumvent any potential recovery action initiated by the Trustee," according to the complaint.

"The restructuring demonstrates both Sterling's and the Lender Banks' serious concerns regarding potential recoveries by the Trustee and supports the Trustee's contention that the Sterling Defendants were inextricably bound to the Madoff fraud," said Fernando Bohorquez, a lawyer for the Trustee at Baker & Hostetler LLP.

For their part, the Mets' owners say that Picard has denied their requests for information regarding his case while they have cooperated with him.

Madoff pleaded guilty in March 2009 to running the largest, most sweeping Ponzi scheme in U.S. history. He is currently serving a 150-year sentence at a medium security federal prison in Butner, N.C.

Madoff was a Mets fan. His satin Mets jacket, emblazoned with his name on the back, was once of his many possessions and properties seized by the U.S. Marshals to compensate victims. The jacket went for $14,500 at auctionTo top of page

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