Monday, January 31, 2011
Report: Wilpons invested in another Ponzi
By Adam Rubin
The New York Times reported Monday that Fred Wilpon and brother-in-law Saul Katz, through a company called Sterling Stamos, actually were investors in what turned out to be a different Ponzi scheme and were compelled to pay back money.
According to the report, the Wilpons returned $12.9 million two years ago under pressure. They had withdrawn their money from the fund operated by Samuel Israel III before its collapse after smelling impropriety.
Here's a small portion of the direct Times report:
The firm Wilpon and Katz started, Sterling Stamos, was accused of having withdrawn money from a fund run by Bayou after detecting evidence of possible fraudulent activity. The firm took out nearly all of its $30 million from the fund months before it collapsed. Lawyers for other investors in the fund went after not only what are known as fictitious profits -- the difference between what Sterling Stamos put into Bayou and what it took out -- but millions more, asserting the other creditors were also entitled to some of it under bankruptcy laws. And that is, in both respects, exactly what the trustee for Madoff victims is doing to Wilpon and Katz now. ... In 2008, the judge in the bankruptcy case offered Sterling Stamos the chance to present its case to a jury, but they opted not to. The burden of proof in such cases is on the defendants to prove their good faith. Ultimately, Sterling Stamos settled the case in May 2009 without admitting wrongdoing and agreed to turn over $12.9 million.
Read the entire sordid story in the Times' full report here.