How Madoff's Ponzi Scheme Could Force the Sale of the Mets

Back in February, we learned that New York Mets principal owner Fred Wilpon was not only good friends with fraudster Bernie Madoff, but a huge investor in his now-defunct fund. A New Yorker article this week profiles Wilpon, explores this relationship with Madoff, and addresses what it means for the Mets. According to the article by Jeffrey Toobin, Wilpon may have to sell his stake.

Wilpon's real-estate development firm Sterling Equities was a Madoff investor since the mid-1980s. Through the methodology that bankruptcy trustee Irving Picard devised to pay back investors, Wilpon thought the $550 million dollars he and his partners had in the fund plus $160 million in cash distributions taken over the years would be their full loss. But Picard saw things differently:

Then, late in 2010, Picard's representatives informed Karen Wagner, one of Wilpon's lawyers at Davis Polk & Wardwell, that the trustee would be seeking a great deal more than a hundred and sixty million from the Sterling investors. Negotiations failed, and in December Picard filed a complaint against the Wilpon group that ultimately ran to more than three hundred and eighty pages. According to Picard, Wilpon and his partners "made so much easy money from Madoff for so long that despite the many objective indicia of fraud before them, the Sterling partners simply chose to look the other way." Picard claimed that the group "benefitted from Madoff's fraud with approximately $300 million of other people's money and withdrawals of over $700 million in principal during the six years" before Madoff was exposed.

Picard believes that Wilpon knew, or certainly should have known, that Madoff was engaged in fraud. The article goes on to say that a $1 billion court judgment would be "cataclysmic" for Wilpon, who is rich -- but not that rich. If the court case goes poorly for him, he may be forced to sell the Mets.

Read the full story at the New Yorker.

Presented by

Daniel Indiviglio was an associate editor at The Atlantic from 2009 through 2011. He is now the Washington, D.C.-based columnist for Reuters Breakingviews. He is also a 2011 Robert Novak Journalism Fellow through the Phillips Foundation. More

Indiviglio has also written for Forbes. Prior to becoming a journalist, he spent several years working as an investment banker and a consultant.

Never Tell People How Old They Look

Age discrimination affects us all. Who cares about youth? James Hamblin turns to his colleague Jeffrey Goldberg for advice.

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register.

blog comments powered by Disqus

Video

Never Tell People How Old They Look

Age discrimination affects us all. James Hamblin turns to a colleague for advice.

Video

Would You Live in a Treehouse?

A treehouse can be an ideal office space, vacation rental, and way of reconnecting with your youth.

Video

Pittsburgh: 'Better Than You Thought'

How Steel City became a bikeable, walkable paradise

Video

A Four-Dimensional Tour of Boston

In this groundbreaking video, time moves at multiple speeds within a single frame.

Video

Who Made Pop Music So Repetitive? You Did.

If pop music is too homogenous, that's because listeners want it that way.

More in Business

Just In