Big News! (update: Mets Minority Stake For Sale)

[Guest LeiterWagnerFasterStrongr]

smg58 wrote: bmfc1 wrote: "Known or should have known" is going to be tough to prove. That's terrible language. If the former is true, there's no need to include the latter. By including the latter, it implies that they can't prove that the Wilpons knew. And "should have known" means what, exactly? A number of investment firms were suspicious about Madoff but didn't act on their suspicions. The Wilpons, as bmfc pointed out, are real-estate specialists.

And besides... what does "should have known" mean? Had opportunity to know? Had ample circumstantial proof if they'd looked? That they should have been educated better on how their meat was made, or that they presumably were?

If I direct someone to order from a menu I either (A) know is poisoned ahead of time or ( find out is poisoned prior to meal service/as the meal is being served, and I say nothing, then I'm criminally liable-- and liable, as well, in a civil suit-- for that person's illness/death, yes? But if I've eaten there before, had good experiences (despite never having been in the kitchen/asking exactly what I'm having), and don't know ahead of time, or indeed, until a coroner's report tells me so, then how the hell can I be liable? I'm not a chef, or a restaurant professional... I'm a (semi-)informed customer making a recommendation.

[Edgy MD]

To heck with the court of public opinion. Steinbrenner was an out-of-control autocrat who treated the rules and the law as an inconvenience and he has virgins dancing on his grave. Let's stick to the court of business law.

[ashie62]

Will the trustee take Ollie, Castillo, Bay, Beltran and Krod in return?

[Vic Sage]

metirish wrote: I expect a full report from our resident lawyer on this.

i only use my powers for good.

[Benjamin Grimm]

Ashie62 wrote: It's gonna be one empty stadium this season

The fans will come to the park, or stay home, based on what's happening on the field, not in a courtroom.

Ashie62 wrote: what FA in his right mind would sign with the Mets if this suit is still out there a year

I'm not so sure that will be a problem either.

Ashie62 wrote: And the prick even knocked down Shea

The Wilpons have achieved their dream of rebuilding Ebbets Field. They should take that as consolation as they pack up their things. And maybe they'll live long enough to see someone knock down Citi Field to rebuild Shea Stadium.

[Valadius]

It's all over, Jeffy!

[ashie62]

Edgy DC wrote: To heck with the court of public opinion. Steinbrenner was an out-of-control autocrat who treated the rules and the law as an inconvenience and he has virgins dancing on his grave. Let's stick to the court of business law.

Maybe the attendance at Mets games next season may help us see how the public feels about this?

Like 1978?

[Edgy MD]

I'm not doing well in betting, but I'm pretty reasonably confident that the team will outdraw the 1978 Mets.

[metsmarathon]

LeiterWagnerFasterStrongr wrote: smg58 wrote: bmfc1 wrote: "Known or should have known" is going to be tough to prove. That's terrible language. If the former is true, there's no need to include the latter. By including the latter, it implies that they can't prove that the Wilpons knew. And "should have known" means what, exactly? A number of investment firms were suspicious about Madoff but didn't act on their suspicions. The Wilpons, as bmfc pointed out, are real-estate specialists. And besides... what does "should have known" mean? Had opportunity to know? Had ample circumstantial proof if they'd looked? That they should have been educated better on how their meat was made, or that they presumably were? If I direct someone to order from a menu I either (A) know is poisoned ahead of time or ( find out is poisoned prior to meal service/as the meal is being served, and I say nothing, then I'm criminally liable-- and liable, as well, in a civil suit-- for that person's illness/death, yes? But if I've eaten there before, had good experiences (despite never having been in the kitchen/asking exactly what I'm having), and don't know ahead of time, or indeed, until a coroner's report tells me so, then how the hell can I be liable? I'm not a chef, or a restaurant professional... I'm a (semi-)informed customer making a recommendation.

but what if the day before you'd seen an ambulance out front of the restaurant, lights all a-flashing..?

[ashie62]

The Wilpons are reminding me of the money lender Martin Short played in "Damages" this season.

[metsmarathon]

on twitter, buster olney wrote: The Mets' best defense in Madoff suit:We signed Oliver Perez and Luis Castillo to $60m deals-and WE were supposed to sniff out Ponzi scheme?

[Guest John Cougar Lunchbucket]

C'mon Buster, the Eddie Kranepool Society was writing that joke two years ago. (No offense to the EKS).

Really, fascinating look inside. Poor Jeff grew up buddies with the Madoff kids, including the one who killed himself recently.

[Valadius]

AP wrote: The lawsuit said Sterling's Madoff accounts produced positive returns during the Black Monday stock market crash of 1987, the bursting of the dot-com bubble in 2000, the terrorist attacks of Sept. 11, 2001, and the recession and housing crisis of 2008.

Red flags anyone?

[Edgy MD]

In hindsight, sure.

"My money was in the hands of a lifelong friend and associate, and he told me the funds were diversified enough to withstand volatile markets. I trusted him."

You may not buy that, but it seems defensible.

[duan]

I totally buy that.
I tell you why - volatility is the speculators friend - if you get it right.
Easy example I can give you
AIB shares in ireland in 2007 were at something like �24
now, this was a blue chip bank, second biggest/biggest company in ireland.
Banking crash etc happened price collapsed to round about �0.20
THEN the next thing was that at the moment where the state guaranteed the banks and a few other bits happened the bank price rose to over �3.
then as things got bad again the price collapsed again and effectively the shares are now worthless.

Now, I know people who sold @ �24, bought @ �0.20 and sold again �3
they made *a lot* of money, yet if you said to anyone that you'd been investing in bank shares over last 5 years they'd assume you lost your shirt.

[Edgy MD]

I'm investing my money with Duan's friend.

I suspect the 'Pons, guilty or not, can get plenty far arguing that, if the SEC and other regulators, missed Madoff's act, the "knew or should have known" argument is hard to sustain.

But again, I can't see all the angles.

[batmagadanleadoff]

duan wrote: I totally buy that. I tell you why - volatility is the speculators friend - if you get it right. Easy example I can give you AIB shares in ireland in 2007 were at something like �24 now, this was a blue chip bank, second biggest/biggest company in ireland. Banking crash etc happened price collapsed to round about �0.20 THEN the next thing was that at the moment where the state guaranteed the banks and a few other bits happened the bank price rose to over �3. then as things got bad again the price collapsed again and effectively the shares are now worthless. Now, I know people who sold @ �24, bought @ �0.20 and sold again �3 they made *a lot* of money, yet if you said to anyone that you'd been investing in bank shares over last 5 years they'd assume you lost your shirt.

I don't see the analogy. The AIB shares weren't any kind of a hedge against volatility. They were real shares, volatile in their own right, and the only AIB investors who profited were those that were either lucky or smart enough to sell for more than they paid. There's no hedge there. You got it right when you wrote that it was a speculative stock. All AIB investors could not have profited because as soon as everyone tries to sell at the top, the price of the AIB shares drops. Though the stock peaked at �24, very few investors could get that amount for their shares if everyone tried to sell at �24 simultaneously.



The Madoff fund was a Ponzi scheme where Madoff kept the capital and only pretended to invest the money, and where apparently (and allegedly) Sterling/Wilpon/Katz always seemed to "profit".

Besides, investments that are designed to hedge against risks are conservative investments by nature: they sacrifice the chances of larger profits (and larger losses) for safety. The idea that Madoff was running a wildly profitable fund that also hedged against risk is oxymoronic.

[batmagadanleadoff]

More on the Madoff mess from the NYT:



Wilpon�s Ownership of Mets Is Threatened

Fred Wilpon�s ability to hold onto the Mets was cast into more doubt Friday when a lawsuit filed by the trustee in the Bernard L. Madoff fraud case was unsealed and revealed in vivid detail the depth of Madoff�s involvement in nearly every aspect of Wilpon�s empire, particularly his team. The financial pressure on Wilpon will now continue to mount, and his preference to sell 20 to 25 percent of the Mets to alleviate the strain, a plan that he announced a week ago, may not turn out to be enough of a remedy. Some sports executives and analysts said Friday that they believed Wilpon would most likely have to sell the team in the face of demands by the trustee, Irving H. Picard, to turn over $300 million in what Picard termed �fictitious profits� and perhaps hundreds of millions more for ignoring warnings that Madoff might have been operating a fraud. Wilpon has talked about the team as a family legacy and how he wants to turn it over to his son, Jeff, the chief operating officer. But whether he can still do so is open to question. �It looks like a very messy situation for Fred,� said Fay Vincent, a former commissioner of baseball who is friendly with Wilpon and Picard. �I know Picard and he�s a serious and solid lawyer, and what he�s doing has to be taken seriously.� Vincent said he did not want it to appear as if he were advising Wilpon on what to do, but added, �It�s important for anyone in a situation this treacherous to consider whether he can run his main business and defend himself simultaneously.� Michael Ozanian, the executive editor of Forbes, which valued the Mets at $858 million last year, said, �I think the Mets have been a franchise that for many years relied on borrowed money.� He said Wilpon would have to sell the team and the SNY television network �to get out of this mess.� Robert Boland, who teaches sports law at New York University�s Tisch Center, said that Wilpon, his partners and their families looked more vulnerable than ever and were unlikely to find relief from any substantial improvement in the financial performances of the team or Citi Field. �This may drag on,� Boland said, adding that he thought Wilpon might be better off battling Picard�s suit in court rather than settling. But the problem, he said, is whether � the Wilpons have the resources to fight for a long time.� The team, the stadium and the SNY network have considerable debt � about $1.5 billion in all by some estimates � and two analysts said there might not be enough money available to Wilpon to settle with Picard and make bond payments, including $52 million a year for the stadium. The Mets also have hit their limit on borrowing from Major League Baseball�s credit line. How baseball views the Mets� situation is unclear. Wilpon and Saul Katz, his brother-in-law and business partner, met with Commissioner Bud Selig this week. Selig and Wilpon are close friends, which might lead Selig to work diligently to help him keep the team. But their meeting occurred before Picard�s complaint was unsealed and the full extent of Madoff�s links to the team was shown. They went far beyond his season tickets at Shea Stadium. According to the lawsuit, Wilpon, Katz and their partners withdrew $94 million over the years from the team�s Madoff accounts. Picard also said Wilpon and Katz used their Madoff money to convince lenders of their creditworthiness when they were seeking to refinance the loans that enabled them to buy out Nelson Doubleday in 2002. The suit says that Wilpon and Katz even offered Madoff a chance to take a partial interest in the franchise around that time, the only known instance when Madoff declined an opportunity to invest alongside them. Madoff was the team�s personal banker, making sure that the Mets could withdraw cash, when needed, to fund the team�s day-to-day operations. That ever-ready honey pot helped the team�s owners meet payroll, pay for stadium operations and provide for deferred compensation to players, according to the lawsuit. The Mets owners also seemed to benefit from the consistently high and steady nature of the returns they appeared to be enjoying from Madoff when they refinanced the team�s lending arrangements in 2004. It was then that the owners represented to banks that Madoff provided �a safe alternative to unattractive money market yields� and that over the previous 25-year period, Madoff�s average returns were 18 percent, with a standard deviation of 4 percent. �The direct connection between the Madoff Ponzi scheme and the Mets� revenues is something that was unexpected,� said Marc Ganis, a sports-industry consultant. �Selig could demand that the team be sold because of the team�s connection to one of the biggest Ponzi schemes ever.� Baseball last faced a financial crisis with one of its teams when Thomas Hicks, then the owner of the Texas Rangers, defaulted on $525 million in loans, which pushed the team into bankruptcy. Last summer, the Rangers were sold in a court auction for $593 million to a group led by the Hall of Fame pitcher Nolan Ryan and Chuck Greenberg. �What we learned from the Rangers involves an owner who owed a great deal of money and could not pay,� Ganis said. �If Picard is successful, then it�s likely to be the same with Wilpon.� Vince Gennaro, a financial consultant to several major league teams, said Wilpon�s ability to hold onto the Mets �depends on the resources he has from other entities and the liquidity he has.� What was revealed Friday, he said, �makes that challenge tougher.�

[Guest Kong76]

Great week for a poster once known as SellTheTeam NOW!!!

[Guest The Second Spitter]

LeiterWagnerFasterStrongr wrote: smg58 wrote: bmfc1 wrote: "Known or should have known" is going to be tough to prove. That's terrible language. If the former is true, there's no need to include the latter. By including the latter, it implies that they can't prove that the Wilpons knew. And "should have known" means what, exactly? A number of investment firms were suspicious about Madoff but didn't act on their suspicions. The Wilpons, as bmfc pointed out, are real-estate specialists. And besides... what does "should have known" mean? Had opportunity to know? Had ample circumstantial proof if they'd looked? That they should have been educated better on how their meat was made, or that they presumably were?n.

The question will be whether Wilpon was "wilfully blind" to the scheme (or "contrived ignorance") The trustee's argument will be that a reasonable person in Wilpon's position (i.e. a magnate with a large cross-section of interests) would have identified the abnormalities of the scheme.

Of course, the issue will be reduced to Wilpon's childhood friendship with Madoff and I'm sure they will go as far as possible to imply Wilpon was in cahoots with Madoff. The trustee will point to the fact that Wilpon used Madoff to facilitate the Mets finances.

[Guest The Second Spitter]

Erased

[metirish]

Madoff could have been Mets part-owner

February, 5, 2011

By Adam Rubin
When Fred Wilpon and family bought out Nelson Doubleday's half of Mets ownership in 2002, Wilpon offered Bernard Madoff a chance to buy into the Mets. Madoff, who otherwise invested $12 million in alleged funny money with Sterling businesses, declined.

Here's the exact passage in the lawsuit:

The only time Sterling offered Madoff an opportunity to invest that he declined was in the Mets, when in 2002, Doubleday sold its 50% ownership of the Mets and Sterling offered Madoff partial ownership interests in the franchise.

[Guest The Second Spitter]

Picard is seeking $1B from Wilpon/Katz

Make it so!

The lawsuit unsealed Friday does not specify the exact amount sought from Fred and Jeff Wilpon, Saul Katz and Sterling companies beyond $300 million in allegedly fraudulent profits. However, the total amount sought because the family allegedly looked the other way turns out to be $1 billion, a plaintiff's lawyer told The New York Times. �What the trustee is looking for here is a payment in cash,� attorney David Sheehan, who leads trustee Irving Picard's team, told the newspaper. �So whether they utilize the Mets, SNY, Sterling properties or any other resource is of no moment to us. What we�re looking for is a billion dollars, and unless we settle for less than that, which we�re not inclined to do, where they get the money is of no moment to us.� Throwing out the astronomical sum likely in part is designed to compel the Wilpons to settle for a lesser figure. But that staggering potential liability if the case ends up at trial demonstrates just how dire things might become for the Wilpon family, and just how tenuous their hold on the Mets may become. Picard seeks the hundreds of millions of extra dollars -- even the principal the Wilpons invested with Bernard Madoff -- because he alleges the Wilpons knew, or should have known because of repeated warnings and other indicators, that Madoff was doing funny business.

[ashie62]

Valadius wrote: AP wrote: The lawsuit said Sterling's Madoff accounts produced positive returns during the Black Monday stock market crash of 1987, the bursting of the dot-com bubble in 2000, the terrorist attacks of Sept. 11, 2001, and the recession and housing crisis of 2008. Red flags anyone?

Fortune were made by many during these crises. You can play them going up or down...

Having said that, Madoff and Freddie are crooks.

[duan]

sorry my earlier post was in reference to Valadius' "Red Flags".
all I was doing with giving the defense that the Wilpons are able to give.
If you have 'belief' in your guy you can imagine he makes all the calls right. And the guys who say he's a shark are just jealous cause they don't do as well.

I've NO idea where along the continuum the reality is - you'd have to have a lot more information then anyone bar the main protagonists has to actually no.

[Edgy MD]

So then, the best witnesses that could testify that the Wilpons were in on the scheme would be those few above them in the pyramid.

Madoff's so far posturing to go down claiming that he alone was responsilbe for the fraud. But the Feds have lined up many more targets of presuction, any of whom could possibly geta plea bargain for testifying against the Wilpons.

But if the Wilpons themselves aren't (yet) targets of prosecution, it looks going to be hard to establish in a civil suit that they were in the scam.

[Benjamin Grimm]

I found this articleon Baseball Prospectus because it contained a UMDB link. The article's author, Neil deMause, anticipates that the Mets will have new ownership sooner rather than later, which seems plausible to me.

I think the Wilpons are going to be stubborn about hanging in there, but they can only do that for so long.

[Guest The Second Spitter]

Edgy DC wrote: So then, the best witnesses that could testify that the Wilpons were in on the scheme would be those few above them in the pyramid. Madoff's so far posturing to go down claiming that he alone was responsilbe for the fraud. But the Feds have lined up many more targets of presuction, any of whom could possibly geta plea bargain for testifying against the Wilpons. But if the Wilpons themselves aren't (yet) targets of prosecution, it looks going to be hard to establish in a civil suit that they were in the scam.

Picard may succeed on the civil suit by demonstrating the arrangement was mutually beneficial or created "a cycle of dependency" as the lawsuit calls it, compelling Wilpon to turn a blind eye.. This would entail a different level of culpability than being complicit with Madoff. It's basically the difference between intent and being reckless.

[Benjamin Grimm]

Presuction?

[Edgy MD]

I've been wretchedly sick this weekend, and my typing reflects that. To be honest, my typing has been terrible for several weeks now, and I'm starting to worry --- frequently going back to re-read my posts and finding prominent typos, missiing words, or entire missing phrases. (Notice also how I write about the Wilpons being "in the scam," rather than "in on the scam.")