27
2011
Judge Dismisses All But Two Counts Against Wilpons
An article by Hojo's Mojo
A jolt of good news for the Mets today as a judge made a preliminary ruling in the Picard vs. Wilpon clawback lawsuit that essentially dismissed all but two counts against the Mets. The NY Post writes:
U.S. District Judge Jed Rakoff said Tuesday the lawsuit brought by Trustee Irving Picard can seek to recover up to $295 million in profits that were paid out to the Mets’ owners during the multi-decade fraud. But he says Picard gain that sum only by proving the Mets’ owners were “willfully blind” to the fraud.
Rakoff says Picard’s claim otherwise would be limited to $83.3 million, the fictitious profits accumulated by the Mets’ owners in the two years before the fraud was revealed.
Picard was seeking to recover as much as $1 billion dollars from the Mets owners in his clawback lawsuit. Now it appears that Picard can only seek to recover up to $295 million in profits that were paid out to the Mets’ owners, but ONLY if he can prove that the Mets’ owners were “willfully blind” to the fraud. Otherwise the Mets are only on the hook for $83.3 million and that’s everything.
Whereas the burden or proof was inititially upon the Mets owners to prove their innocence, the burden now shifts to Picard who must prove the Wilpons committed fraud, something that will be extremely difficult to do without any tangible evidence.
This can only be summed up as a tremendous win for the Mets the way I see it.
Also in other financial news, today Mets GM confirmed that the Mets payroll will be in the $120 million dollar range – significantly higher than the $100 million dollar figure that has been floating around for most of the season.
Good day for the Wilpons, and a good day for the Mets and fans as well… Perfect timing with the Hot Stove season only days away!
About the Author: Rob Johnson
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Sweet. Let’s sign Reyes & CJ.
Looks like the Mets will have a $120 million payroll. We should be able to sign Reyes, Wilson, Francisco, and Peralta. I’d still like to non-tender Pelfrey though….
nj stuck, the CORE don’t usually agree with you, but on this one, i am praying this is the case. also, as i said this before, while we at it, why not go after another bonafide starter, somebody like cain, so we can have santana, cain, wilson, dicky and niese. that is a pretty good rotation, we already have somebody like gee, even capuano as a rotation spotter or long reliever guy, with reyes at the top of the helm, everyone else becomes better, healthy ike, tejada, duda, murphy and co can provide a good lineup enough to produce run for our pitching..
Alex68 = CORE ? How did the appointment take place? Also have nice dreams about that rotation, because that’s all it will be is dreams.
i know.. but since NOW we may have the $ to spend, why not go for the good players who can play instead of CRAP? is time for sandy and his crew to earn their $, he’s gotten a pass this past offseason because it was gonna be omar’s fault regardless if the mets did bad, so NOW is when he gets to work, he knows the bullpen sucks, the SP sucks, get to it then.. start by building a good SP rotation, then get good bullpen help instead of the crap he got us last year in carrasco, byrdak, thayer and boyer..
Yes, he needs to get on the stick and bring in players who will compete to raise the level of performance. There is obviously help needed with both BP and SP. If we look to Alderson’s track record with this team so far, it is pretty dismal considering what he has done with BP, as you pointed out. So although your wish is admirable, based on reality, I think it will only be a dream.
The only way you are getting Cain or the likes would be to trade Wright, which is a whole different debate. And honestly, Cain hits FA in 2013? If you are trading Wright, you shoot for Bumgarden, not Cain. Now, all that said, I’m still in the NOT trade Wright camp. Unto each their own.
Now, why I am for signing CJ is he is not just a “this year” signing. He takes pressure off Santana, helps slide everyone back one, allows Pelfrey to be traded/dumped, and he’s still in his prime. Why I don’t think he will be signed is a combo of the Type A status, the lack of FA SPs out there and the number of teams that will be involved. Hell, FLA has a new stadium, so they’ll be looking to make a splash in the market, similar to the Nats… it’s going to be a good offseason to be a FA this year…
And if Cain/Bumgarden/Whomever + CJ comes, Cap is gone. And I wouldn’t worry about him leaving if those 2 guys are on the rotation.
stuckin,
agree, but i’d trade wright for cain, although i know it will take some prospects as well but i’ll do it, also, not sure if you heard, but wright will also be a FA in 2013, you rather pay wright $16 million than say maybe cain?? while bumgarner is ok, cain is a stud, if we get cain and wilson, and sandy fix the bullpen,our team becomes WS contender instantly wouldn’t you agree?
Tex, Wright is a 1 year rental if traded though, since only the Mets have a team only option for 2013.
My guess (just an opinion) is that they pick up the option, but let him play out the contract after some contract extension talk after the 2012 season. But I don’t see him getting a lot of years and huge $$ on an extension, unless he really rebounds to the 2006-2008 version (and that I don’t expect)
Agreed.
No need to worry about Type A status for Wilson, since the Mets’ first-round pick is protected.
All the better!
Not really concerned about the core, unless the CORE =’s Reyes, Wright, Davis & Santana.
no chance the mets lose this case. this is probably the end of it here as picard must know he is boned.
Wrong, he’s not giving up on $295 mil that easily.
We didn’t give up on Parnell a closer too easily either but insistence does not make for success!
The burden of proof is on Picard!
He has to prove the Wilpons were in on it or he loses!
And knowing that this will get settled out of court because otherwise Picard could get NOTHING!
There is an excellent chance of an out of court settlement for something between the $83 mil and $295 mil, but Picard is NOT going away. He will continue to pursue maximizing the clawback to whatever extent he can. Does “being willfully blind” mean they were in on it? I don’t know if that’s the intent of the judge’s decision. You would have to get inside the judge’s mind to fathom the legal meaning to answer that? I don’t think we can determine that here.
I agree some settlement will be made, Prob more than the 85 Mil and prob not as much as the 295 Mil.
As to what is “willfully blind”, all it really means is they KNEW it was a scam (figured it out but not actually PART of it) and invested anyway.
merely suspecting it might be a scam would not be enough to prove willfully blind!
Picard would have to prove that they knew it was a scam and decided to invest in it to get in on the fraud.
Good news tempered by bad decisions: picking up Collins’ ’13 option a year too early and rumors that Dan Warthen will return as pitching coach next season as well. With Warthen, they’d better spend some money on pitchers this winter who don’t need his coaching otherwise we’re in for another year of complete and utter pitching disaster again next year.
warthen needs to go after a year of pitching this bad.
Now,we just need our apology letter when the season is over from the two morons who own the team and everything will be hunky dory
It’s amazing that Picard thinks Wilpon and family knew it was a ponzi scheme but Madoffs family did not know.
Or the SEC. The very government body that is charged with knowing. Who actually DID investigate Madoff and found nothing.
Hey, when your brokers returning better than average results quarter after quarter NO ONE is worrying. It’s not until he stops delivering those results that people start asking questions. Questions are the last thing Madoff ever wanted anyone asking hence the returns every quarter that precluded people from asking questions.
If you had a new roof put on your house would you call the roofer and wonder about whether you might have a leak that you couldn’t see even though there wasn’t any water getting through? Of course not. Your only calling that roofer when you see water.
I don’t think the Wilpon’s necessarily cared HOW he was doing it. I think that they just cared that he would be able to continue doing it and that would go completely against the grain of them knowing it was a ponzi scheme. If they knew or suspected it may be they wouldn’t have had most of their cash investments with him. They would have had 10%, not 70%. They would have been gradually shrinking those accounts, not adding to them.
Madoff was very shrewd. His funds were HARD for people to get into. He created a demand based on that very thing. He was telling people that he wasn’t taking any new money in this year but maybe next year he’d open it back up. Come next year people who thought they were “in the know” were dying to get in, and they certainly didn’t have any “questions” when the opportunity arrived.
And despite this report I bet some people around here will STILL insist the Wilpon’s finances are in trouble and we need to cut salary wholesale!
There is more to the Wilpon’s fianances than just the Madoff case. There is the state of their real estate business interests in an economy that is weak at best and also the fact that Citi has been running fairly empty for quite a while. Do the Wilpon’s realize they need a quality team to fill seats? That’s asking a lot. They would rather fill seats by feeding us a diet of hype. It’s a lot more affordable that way than actually paying good players at market rates
Well you obviously don’t understand the real Estate business they are in I guess…
They don’t make money buying and selling realestate like your local Century one dealer!
They are not in the business of buying and selling real estate they are in the buy and rent our space section which has actually been helped by the devaluation of their property involving Property taxes (they prob pay less) yet still collect the same amount of Rent they always did!
They are in Commercial Real Estate not the domestic which has issues because no one can borrow money to buy!
The real estate problems are only hurting those who need to sell property right now.
In fact their business is probably INVESTING in property now not selling as it is a buyers market!
They are not sufferring at all due to the Real Estate situation and if there is any affect on them it is because there may be fewer renters due to some of their tenants going out of business and more open space in their properties than usual.
But other than that they haven’t lost a penny on their real estate investments!
Rents don’t go down!
They may flatten out and stay the same or only go up moderatly but the NEVER go down!
Metsie, taxes haven’t gone down and vacancies have gone up. That means rents go down. In addition people aren’t getting loans to open new businesses that would rent space and plenty of businesses have gone out.
Construction loans have to be refinanced and lower property values preclude you from being able to do this.
Now the Wilpon’s could be in a better situation than many other commercial real estate companies, or they could be about the same or even worse for all we know. One thing we do know is that NYC hasn’t been affected as much as most other parts of the Country so they have to be in better shape than companies outside NY.
If they were able to refinance their debt at today’s interest rates they’d probably be in great shape but they can’t. On paper they owe more than what their holdings are worth so all they can do is ride out the storm and when it turns they’ll be in good shape but I’m sure there is a cash flow crunch and plenty of debt to cover like 50 M in Stadium bond payments. That combined with a 50 M loss is a significant nut to cover.
The Wilpon’s have always run the Mets as a business, not as a sports team where success is judged simply on post season appearances and World Series victories so now that their a net drain the belt is going to be tightened. 100 M is a big deal especially when many of your customers simply cannot afford to go to the games.
The Jets and Giants had waiting lists for years for season tickets and when their new stadium went up all of a sudden were advertising the availability of season tickets. True a Met Fan didn’t have to pony up $20,000 per ticket for a PSL. That money was supossed to come from the fans through Citi Field because of the difference in number of home games between baseball and football and $200.00 for a family of four might as well be $20,000 for a lot of people and even for those that it isn’t $200.00 four times a year instead of ten has to suffice for right now.
The Wilpon may have caught on about type A free agency and how giving up a first or second round pick every year harms your chances down the road but it wouldn’t cause them to skimp on type B free agents, the draft or international free agency and they have continued to do that.
We spent about 20th in MLB on the 2012 draft despite having an extra top round pick. We also spent either at the bottom or near to the bottom in international free agency this year. The only chance at all they have to fill that stadium is to put a good exciting team out there and while their aren’t many difference makers available this off season there would almost have to be a salary dump or two in which we could upgrade in a couple of areas and pare down the glut of duplicate type players in order to do it.
I don’t see that happening and it’s all because the cash really isn’t there. Sure it’s gonna come back but right now it’s all about making the nut every month in order to still have your **** when it comes back.
If all it took to intelligently fill ALL of our needs were 20 M to Reyes and 30 M for everything else I think they’d be all over that. If that’s all it would take to get an extra 1,000,000 fans in Citi Field next year and they had it, I just don’t see how they say no. After all a million more fans is 100 million more dollars so even half of that covers the bond payment alone and avoids the loss of fans who have been showing up which really has to be the biggest concern right now.
There really is no way of saying what position the Wilpon’s are in but all indications are that it is a severe cash flow situation. 50 M between Reyes and 7-8 other spots on the 25, with 50 M coming off is a wash. No reason not spend it if you had it. Then again if you had it you wouldn’t have gone to MLB for an emergency 25 M dollar loan like we did a year ago or be looking to sell part of the team (while maintaining a controlling interest)
Maybe things change dramatically now with the Picard situation coming back to earth but chances are that it won’t until it’s a completely settled done deal and they know exactly what they have and what they have to give back so this year the best we can probably hope for is resigning Reyes and some good smart choices for 1 or 2 years to fill in our weak spots. They’ve always risked it to juice up attendance and I really think the reason they didn’t last year and probably won’t this year is because they either don’t have it, or it’s so thin they can’t take a chance.
Property taxes have most certainly gone down not in RATE but in assessed value!
Your property taxes are based on the assessed value of the porperty and many folks have had their assesment adjusted down enough to offset any raises made to the property tax rate!
People who owned a million dollar property are now getting assesed at under a million. That means lower or no tax increase for many!
Vacancies have not gone up as uch as you think. We have not seen a lot of businesses go OUT of business at all. They are just not expanding and not moving to larger spaces but they are still renting the spaces they had before the credit crunch.
There are fewer NEW businesses but that doesn’t mean the Wilpons lost a penny they were making before just that they may not be making new potential profits if the economy was good!
As for refinancing interests rates are LOWER than they were two years ago so provided you have money and collateral it’s no problem at all to refinance loans. Only the regular joes whose assets are all tied into the HOUSE they want to refinance are having issues getting those loans!
But a guy like Wilpon is going to have no such problems!
You guys have to stop looking at the economy from your own limited perspective.
Folks with money are not being hurt or losing money unless they have it all in the Stock Market and it has gone down.
The real estate business is losing value of the property but the real estate business is not capable of losing you money unless you are forced to sell a property at less value than you paid for it!
In the case of the regular joe he bought at the height of the bubble and now can’t sell it for enough money to even pay off the loan.
Thats not the case with most Commerical property. The busines is not about buying low and selling high it is about buying and renting it out to turn a profit!
Could they be making MORE money in a better economy? SURE! but they are not losing money they already have just not making profits they might have made if the economy didn’t suck!
Metsie, Muncipalities are NOT falling all over themselves trying to lower property rates. They never do. Real estate gets assessed every 10 years or so. Could the Wilpon’s have negotiated better tax rates. Maybe. Guaranteed that they did? Not even close. Probably unlikely.
Refinancing is exactly where the Wilpon’s have been unsuccessful. They restructured once and it was a huge ordeal. When they tried to again they couldn’t. That’s why they went to MLB for what to them is a really small sum. 25 M. Then still had to find a minority partner and I would venture a guess that that was the last thing they wanted to do.
When companies are not taking over larger space’s that’s what causes a glut on the market and if you don’t think companies aren’t approaching their landlords for rent reductions and incentives to stay your wrong. It’s clearly a renters market right now and that always costs the landlord.
We have no way of knowing how the situation for each individual investor is but overall lots of jobs have been lost and that means companies looking for smaller spaces or rent reductions.
We can’t speculate that the Wilpon’s are flush with cash I mean they did “lose” 500 M that they thought they had. They’ll probably have to fork over another 150-300 M and all available information points to them having cash flow problems.
Without knowing for sure what their situation is, it’s hard to assume that it’s good, after all they are gamblers by nature. Even some smaller deals like the Bonilla one and other deferred contracts give a glimpse into their thinking. Instead of paying the 5 M they assumed when they reacquired him they tried to save the 5 M and put it off over time. That contract was one they exchanged another bad deal for. They don’t insure their long term contracts against injury (that we know of) Didn’t purchase the ponzi insurance on their Madoff accounts. (good thing or it might have cost them the suit if they did)
There is every reason to believe that they are running short and bound and determined to hold on no matter what and while I have no stake in whether they keep the team or not, the devil you know is frequently better than the devil you don’t.
“Muncipalities are NOT falling all over themselves trying to lower property rates”
Again you read what you WANT to hear and not what was stated!
They are NOT lowering property rates but the assesment of VALUE thopse rates apply to has gone down!
10% of a 10 Million dollar property is more than 12% of a 5 Million dollar property!
EVERY municiplaity in the country is dealing with this problem which is why most have run out of money!
You can’t assess a house no longer worth 200K 200K when it’s actual value is 100K!
If you don’t realize that then all the paragraphs in the world is gointg to help you!
Property taxes always go up!
But property assessed value that the tax is a percentage of has gone down since the RE bubble burst!
Here read and learn the difference!
http://www.orps.state.ny.us/pamphlet/taxworks.htm
For every property that has gone down in value that the Wilpons own the taxes on them have gone down with them and that means less money they have to pay or earn in rent to keep them and make a profit!
I already know the difference. I’ve gone through the process a number of times. It’s not as easy they make it appear. It’s government beaucracy at it’s best and never to benefit the citizens but to raise revenue for the government.
There is also no guarantee that they did this, were successful at it and even if they were, that it resulted in any sort of real relief for them.
As I stated before landlords are getting squeezed by their existing tenants as well so even if they did save a little on one hand……
What is known is that they weren’t able to restructure any of their debt after 2009. That means they weren’t able to take advantage of the slide in interest rates and that is the thing that would have made the biggest difference by far.
The fact that a downturn in commercial real estate, the loss of 500 M they thought they had, a lawsuit seeking as much as a billion dollars and the Mets attendance shrinking by an enormous percent right after going in hock to build a stadium and start a cable network all occurred at exactly the same time isn’t going to be mitigated by saving a couple quid in real estate taxes.
Is “being willfully blind” to Madoff’s fraud equivalent to fraud on the part of the Wilpon’s as this article states? In my opinion, I think not.
Only if they themselves were experienced as hedge fund managers or something. They are real estate developers, not investment tycoons.
Their real estate holdings are quite extensive as well as having ownership shares in a broadcasting network, MLB team, Minor League franchises, MLB stadium, and all the endoresements and ancillary businesses that go with it. That does put them in a special category of knowledgeable investors. They are not a little Mom and Pop operation by any stretch of the imagination. So don’t feed me this diet of the poor Wilpon hayseeds from the boonies.
It’s not dependent on being knowledgable about investing…
Only knowledgable about it being a fraud.
There was no proof that it was a fraud and any suspicions they may have had went away when the SCC cleared madoff as a legitimate fund!
So there is no way in hell Picard can prove they should have known more than the government angency charged with oversight and that had FAR MORE ACCESS to the books than Wilpon would have!
I really have no idea how Picard has been able to drag this out when the SEC investigated Madoff something like 16 times in 20 years and found nothing.
Can you imagine the implications on the financial community if a judge says “well, the government agency tasked specifically to sniff these things out is simply useless and you are on your own when checking into these things, even if you are an amateur”?
If my 401(k) includes investment in Boeing, does that make me an expert on aircraft?