A federal judge will decide whether the owners of the New York Mets will have to give up $1 billion because of their connection to Ponzi schemer Bernard Madoff.
NEW YORK (CNNMoney) -- A federal judge will hear arguments Friday on whether the owners of the New York Mets baseball team should have to forfeit $1 billion for their connection to Bernard Madoff's Ponzi scheme.
Judge Jed Rakoff has scheduled a hearing at U.S. District Court in New York concerning a lawsuit from the firm of Irving Picard, who was appointed by federal Bankruptcy Court to track down money and assets lost to Madoff's pyramid-style scam. Rakoff could rule on the case Friday, or wait to issue his decision.
Picard has sued investors who profited from the scheme, including Fred Wilpon, Saul Katz and Sterling Equities, the owners of the Mets. Not only is Picard suing them for their $300 million in profits, but he's going after the $700 million in principal that they deposited and then withdrew from Madoff's firm, which was nothing more than a front for a scam.
The trustee alleges that the Mets' owners were willfully blind to the fraud, seeing statement after statement of excellent returns from Madoff and tapping their account when they wanted funds.
The Mets owners are trying to have the lawsuit dismissed as "illegitimate." Like many of the other investors who have been sued by Picard, they claim they did not know what Madoff was up to and they would not have knowingly participating in a Ponzi scheme.
"The evidence submitted by the Sterling defendants demonstrates that all of the trustee's claims of 'willful blindness' are false or immaterial," said lawyers representing the Mets owners, in documents submitted to the court.
The trustee included the $700 million principal in his lawsuit as a type of penalty fee against the owners, according to John Donnelly, a partner with the law firm Cozen O'Connor who represented sued investors in the Allen Stanford fraud case.
Donnelly said the trustee based his suit on the belief that the Mets' owners "turned a blind eye to the fact that this scheme was happening, because it was in their interest to do so."
Donnelly said the most likely scenario is that the judge won't dismiss the lawsuit, as the owners have requested. But the judge probably won't honor the "very aggressive" attempt to capture the full $1 billion, he said, though the Mets owners are going to have a tough time trying to avoid paying the "fictitious profits" of $300 million.
Meanwhile, Madoff is languishing in a federal prison in North Carolina, where he is serving a 150-year sentence.
Madoff pleaded guilty in 2009 to 11 counts related to running the largest Ponzi scheme in history. Thousands of investors were duped out of at least $20 billion, which Madoff used to fund an extravagant lifestyle for him and his wife Ruth. They lived in a $7 million Manhattan penthouse, as well mansions in the Hamptons, Florida and France.
Madoff's possessions have been auctioned off to compensate his victims, including his customized satin Mets jacket, which fetched nearly $15,000. 
