Madoff Trustee Sues Sterling Equities

[metirish]

WSJ

By CHAD BRAY NEW YORK�The trustee recovering money on behalf of victims of Bernard Madoff's fraud sued New York Mets principal owner Fred Wilpon and his real-estate investment firm, Sterling Equities Associates, on Tuesday. Irving Picard has filed a flurry of lawsuits in recent days seeking to recover money from investors who allegedly received false profits from the Ponzi scheme or persons or institutions he claims enabled the fraud. Under federal bankruptcy law, Mr. Picard must bring such lawsuits by Dec. 11, the two-year anniversary of Mr. Madoff's arrest and his firm's demise. "We are currently engaged in good-faith negotiations with the sterling defendants," Mr. Picard in a statement. The lawsuit was filed in U.S Bankruptcy Court in Manhattan under seal on Tuesday in light of the ongoing negotiations, said Fernando Bohorquez Jr., a lawyer representing Mr. Picard. Sterling Equities and its partners are among the so-called "net winners" whom Mr. Picard claims withdrew more than they originally invested with Mr. Madoff. In a court filing last year, Mr. Picard alleged a partnership associated with the baseball team, Mets LP, gained a net $48 million through its investments with Mr. Madoff. The partnership deposited about $523 million over the years with Mr. Madoff, a longtime friend of Mr. Wilpon's, and withdrew about $571 million, Mr. Picard said at the time. Sterling Equities declined comment in a statement Tuesday, saying the parties are engaged in settlement negotiations. "Regardless of the outcome of these discussions, we want to emphasize that the New York Mets will have all the necessary financial and operational resources to fully compete and win," Sterling Equities said. "That is our commitment to our fans and to New York." Mr. Picard has gone after a number of financial institutions in recent weeks, including lawsuits against UBS AG, HSBC Holdings PLC and J.P. Morgan Chase & Co. The banks have all denied wrongdoing. On Tuesday, Mr. Picard and federal prosecutors reached a joint settlement with the family of Carl Shapiro, one of Mr. Madoff's earliest investors. Under the settlement, Mr. Shapiro's family will pay $625 million. Separately, Mr. Wilpon and Sterling Equities were sued in July on behalf of participants in the company's 401(k) plan. The widow of a plan participant claimed 92% of the plan's assets, or about $16.2 million, were invested with Mr. Madoff's firm at the end of 2007. Sterling Equities said at the time that the lawsuit was without merit and that the plan and its participants were "among the many victims of the Madoff fraud." Write to Chad Bray at chad.bray@dowjones.com

Thankfully none of these shenanigans will effect the Mets ...right?

[Vic Sage]

so let me get this straight: the wilpons made nearly $50M off the scams of their pal Bernie, while their employees took a huge bath on their 401k investments resulting from that profitable fraud?

is that about right?

[Valadius]

They made money, and yet claim they're in the poorhouse?

Something is really off here, and I'm wondering if the anticipation of such a lawsuit is the reason the Mets won't spend any more dough.

[TransMonk]

I feel dirty just reading that article.

[Guest Edgy DC]

Valadius wrote: They made money, and yet claim they're in the poorhouse? Something is really off here, and I'm wondering if the anticipation of such a lawsuit is the reason the Mets won't spend any more dough.

I miss the part where the Mets or the Wilpons claim they're in the poorhouse.

[batmagadanleadoff]

Valadius wrote: Something is really off here, and I'm wondering if the anticipation of such a lawsuit is the reason the Mets won't spend any more dough.

It could be. The Wilpons had to have been advised about the likelihood -- I'd say certainty-- of these lawsuits. What surprises me is that it took until the eleventh hour for the Wilpons to be dragged in.

If I was the trustee, I'd be very curious about the circumstances that enabled Wilpon groups to profit from Madoff, considering that Madoff's holdings were fabricated and that there probably weren't any real profits to distribute. How is it that Sterling Equities profited from Madoff investments while 92% of the employee pension plan was wiped out? Did Sterling really profit or did Madoff favor Wilpon at the expense his other victims?

Edited December 7, 2010 by Guest

[Guest Edgy DC]

Vic Sage wrote: so let me get this straight: the wilpons made nearly $50M off the scams of their pal Bernie, while their employees took a huge bath on their 401k investments resulting from that profitable fraud? is that about right?

Well, this article doesn't speak to the employees' situation, it certainly has been reported that the Mets' employees were broadly bilked.

It makes sense, as a corporate investor is more likely to withdraw money as needed while an employee --- for whom a retirement account is often his or her only liquid asset --- would tend to lay off that money as long as possible, letting it compound on those bullshit profit reports.

[Guest Edgy DC]

batmagadanleadoff wrote: Valadius wrote: Something is really off here, and I'm wondering if the anticipation of such a lawsuit is the reason the Mets won't spend any more dough. It could be. The Wilpons had to have been advised about the likelihood -- I'd say certainty-- of these lawsuits. What surprises me is that it took until the eleventh hour for the Wilpons to be dragged in.

They've been dragged in all along, and have been negotiating for quite some time with regards to their obligation towards restitution toward the other investors. The reason he's filing suit now is that the sunset on the eligibility of the suit is about to come, and with that, the hammer that he holds over the Wilpons' heads.

If I was the trustee, I'd be very curious about the circumstances that enabled Wilpon groups to profit from Madoff, considering that Madoff's holdings were fabricated and that there probably weren't any real profits to distribute. How is it that Sterling Equities profited from Madoff investments while 92% of the employee pension plan was wiped out?

Because, presumably, they made withdrawals from their accounts, and Madoff had to pay up from all the money he had accrued to keep the lie alive.

[batmagadanleadoff]

Edgy DC wrote: batmagadanleadoff wrote: Valadius wrote: Something is really off here, and I'm wondering if the anticipation of such a lawsuit is the reason the Mets won't spend any more dough. It could be. The Wilpons had to have been advised about the likelihood -- I'd say certainty-- of these lawsuits. What surprises me is that it took until the eleventh hour for the Wilpons to be dragged in. They've been dragged in all along, and have been negotiating for quite some time with regards to their obligation towards restitution toward the other investors. The reason he's filing suit now is that the sunset on the eligibility of the suit is about to come, and with that, the hammer that he holds over the Wilpons' heads.

I know that. That's why I wrote "eleventh hour". It appears that, so far, Sterling hasn't found the proper motivation to settle this matter --- at least not to the trustee's satisfaction.

Edited December 7, 2010 by Guest

[TransMonk]

Sterling Equities wrote: the New York Mets will have all the necessary financial and operational resources to fully compete and win

I wonder exactly what they mean by "compete" and by "win".

[Guest John Cougar Lunchbucket]

If there's one overriding uniformed conclusion I've drawn from the whole Madoff episode, it's that the folks who invested with him almost had to know there was something fishy about it, or rather, they handed off their money willfully not wanting to know how it returned as much as as it did. I don't know how you unravel all this but I'm sure the losers are as guilty as the gainers in that respect.

[Ceetar]

TransMonk wrote: Sterling Equities wrote: the New York Mets will have all the necessary financial and operational resources to fully compete and win I wonder exactly what they mean by "compete" and by "win".

As do i. I mean, they've repeatedly stated that it won't affect the Mets. They also said that anyone they interviewed for GM that said the Mets weren't that far from competing wasn't going to get the job. So, if they're entirely truthful, they realize they need to spend.

Yet Sandy is repeatedly quoted implying that the Mets have a hard budget that they're almost up against.

So which is it? Someone ask Sandy.

[batmagadanleadoff]

John Cougar Lunchbucket wrote: If there's one overriding uniformed conclusion I've drawn from the whole Madoff episode, it's that the folks who invested with him almost had to know there was something fishy about it, or rather, they handed off their money willfully not wanting to know how it returned as much as as it did. I don't know how you unravel all this but I'm sure the losers are as guilty as the gainers in that respect.

You could be right. I don't know what the Wilpon group knew or didn't know, but it's quite [crossout]possible[/crossout] probable, as it is with most Ponzi schemes, that Madoff was simply sitting on piles and piles of money, and doling some of it back to his investors as supposed "profits', arbitrarily and at his whim in order to perpetuate his scam --- and that these supposed "profits" had no correlation to any real-life profitable ROI because there were no real profits. If so, the Wilpon group should take a hit to the wallet down the line.

[ashie62]

My guess is will be settled slightly north or south of the plaintiff's number