Any chance of Fred Wilpon maintaining ownership of the Mets likely ended this week thanks to a U.S district court judge named Jed Rakoff.
(Opening Day: Mets Fans No Longer Pay To Watch “Pon Stars”)
On the eve of a federal court proceeding to determine if the Mets owe up to $383 million to the victims of the $50 billion Bernie Madoff Ponzi, and with Wilpon and the Mets already facing long odds in their attempt to “restructure” hundreds of millions in debt directly attributed to their intimate and unorthodox financial arrangement with Madoff, Wednesday Rakoff issued the following requirements of the MLB team’s counsel in its bid to stave off additional creditors:
A central issue in the forthcoming trial is whether the transfers that Madoff Securities made to the defendants during the two years preceding Madoff Securities’ filing for bankruptcy –up to an amount equal to their investment with Madoff Securities during the same period -were received by the defendants in good faith, i.e., without their having willfully blinded themselves to Madoff’s scheme.
At the in-court conference on March 9, 2012, the parties raised the question of whether, on the facts of this case, this issue should be viewed as an issue under 11 U.S.C. § 548(a) (1) (A), in which case the burden of proving willful blindness would be on the plaintiff, or as an issue under 11 U.S.C. § 548(c), in which case the burden of proving the absence of willful blindness would be on the defendants.
Having considered the parties’ submissions, the Court adheres to its prior determination that this is an issue under § 548(c), and that therefore the burden of proving, by a preponderance of the evidence, that the defendants received the aforementioned transfers in good faith (i.e.,in the absence of willful blindness) rests on the defendants.
Ingested without an Everest-like level of evidence against Wilpon and the Mets in relation to the nature of their “faith” in the legitimacy of their Madoff investments, Rakoff’s order may seem somewhat innocuous.
But as such evidence exists, including the documentation of a phony $54 million “investment” by Ruth Madoff (on Mets letterheard!) and the son of Mets co-Owner Saul Katz stating under oath that the team initially tried to keep their “investments” with Madoff a secret, even if Wilpon & Co. win a satisfactory judgement the necessary court defense required to provide such an outcome completely defeats their subsequent reasoning for being allowed to keep the team.
Thus far the defense proffered by Wilpon - who is unquestionably the front man of the Mets - is that the unflinching, decades-long level of trust he placed with Madoff in “investing” billions in assets was solely based on the Ponzi schemer being his “family friend.”
(Mets Letterhead: Phony “Investment” Helped Save SNY Deal For Team)
But in the same breath Wilpon has also stated as part of that defense that he wasn’t that close to Madoff.
Excerpt from Wilpon discussing his relationship to Madoff during a sworn July 10, 2010, deposition in New York:
I had a personal relationship with the Madoffs that developed over time, and not an everyday personal relationship, but a friendship.
And so I made it a policy that when I saw him at a charitable event or celebration of some kind, you know, we attended his kids’ weddings, he attended our kids’, you know, we were family friends, I just didn’t discuss business with him.
So my conversations with Bernie Madoff were really of a, just of a personal nature.
Of what was happening in their lives and what was happening in our lives.
Not in a context of, you know, what’s happening in the business, how are you investing these funds?
Because, frankly, I wouldn’t — that’s not my expertise. I wouldn’t really know, and I didn’t want to mix the two.
So, once a year we’d go and have a conversation, mostly schmoozing. You know what schmoozing is.
That’s the kind of relationship it was. Very trusting relationship.
There’s no person that you will talk to, none, that is more betrayed than I am.
So Wilpon didn’t have an “everyday personal relationship” with the man the Mets tied up most of their money with while also vigorously transacting that cash to purposefully extract as much of Madoff’s phony “interest” as possible.
Yet Wilpon also claims he nor anyone with the Mets ever investigated Madoff’s “investment” firm to see if transacting billions with Madoff was a safe, prudent investment for the Mets - because they trusted him so much!
If Wilpon was unsophisticated enough to think the Mets should not investigate the man - with whom he himself was not close to - in sole possession of the vast majority of the team’s money over the years, how does Wilpon possibly possess the level of sophistication and credibility required to continue to run a Major League Baseball franchise in the country’s #1 market?
The answer probably no longer matters.
A $40 million bridge loan from Bank of America, taken out late last November, is due back this month. The minority stakes would also go toward paying a past-due loan of $25 million due back to Major League Baseball, and a portion–likely at least $100 million–of the $430 million debt against the team due back in June 2014.
But while Wilpon assured reporters, yet again, that those other sales were imminent, we are now more than halfway through March without any news on that front.
Then there’s this excerpt from a recent post by Mike Ozanian of Forbes.com that also ponders the immediate solvency of Wilpon’s Mets:
The Mets are praying that their season ticket sales will look good enough by the end of April that they can restructure $430 million of debt due in two years. If not, two sports bankers familiar with the team’s finances I have spoken with believe it is likely the Mets will follow the Dodgers into Chapter 11.
As of this morning you could still buy seats for the Mets home opener against the Braves on April 5 for yourself and 11 of your closest friends - together - in at least three Citi Field sections spanning low-mid-high prices.
SbB can also confirm that the full-size image of what is likely the last money shot of baseball’s “Pon Stars” is safe for work.