Wednesday, November 23, 2011
Wilpons to face jury trial?
By Adam Rubin
The trustee suing New York Mets principal owner Fred Wilpon and family in an attempt to recover alleged profits from Bernard Madoff's Ponzi scheme scored a modest victory Wednesday.
U.S. District Court Judge Jed S. Rakoff granted trustee Irving Picard's request to have the trial, which is set for March 19, heard before a jury. Attorneys for Wilpon and brother-in-law Saul Katz argued the judge ought to decide the case if it goes unsettled beforehand.
The ruling can be viewed as a victory for Picard from the perspective that a jury might respond differently -- and more unpredictably -- to courtroom arguments than a judge faced with identical circumstances.
The Wilpon family previously won a much larger courtroom decision, which reduced their potential liability from $1 billion to $386 million -- and very possibly to $83 million or less.
In a Sept. 27 decision that has enormous implications for Madoff victims who are depending on the trustee to recover funds to disburse to them, Rakoff ruled that the Wilpons are only potentially on the hook for money received from Madoff in the immediate two years before the convicted swindler was shut down.
Picard wanted to reach back six years, citing New York State law, which exceeds federal regulations by four years.
Picard has appealed that decision. Rakoff has yet to rule about whether to allow the appeal to proceed to a higher court now.
If the two-year figure stands, Picard may have a difficult time collecting more than $83 million -- the profits alleged to have been withdrawn from Madoff funds by the Wilpon family and their businesses and charities in the two years before Madoff's December 2008 arrest.
The remainder of the money Picard seeks is based on the assertion the Wilpons ought to forfeit principal invested because they should have recognized warning signs a fraud may be occurring.
But Rakoff set a higher barrier for Picard to prevail in a claim to recover principal. The judge essentially decided the Wilpons would have needed to have been aware of fraud occurring in order to be compelled to return principal, not merely have ignored warning signs.
Adam Rubin covers the Mets for ESPNNewYork.com.