Mets Owners Say Jury Must Hear of SEC 'Inaction' on Madoff
By Linda Sandler and Bob Van Voris – Mar 13, 2012 10:06 AM ET
The New York Mets owners, facing a trial over whether they suspected Bernard Madoff’s fraud when they withdrew $303 million from his brokerage, said the judge should allow evidence of the Securities and Exchange Commission’s “inaction” as the defunct firm’s regulator.
The Mets owners invested with Madoff believing his firm was regulated, they said in a court filing. The fact that the SEC never imposed sanctions on the con man can help them establish they trusted their money manager and weren’t turning “a blind eye” to accessible information about his operations, as a lawsuit by the Madoff’s firm’s liquidator alleged, they said.
“The absence of any regulatory action against Madoff Securities is relevant to defendants’ good faith,” they said in the filing in U.S. District Court in Manhattan yesterday. “The jury must be allowed to hear all the information about Madoff that defendants were aware of and took into consideration when they invested.”
U.S. District Judge Jed Rakoff last week set the number of jurors and other rules for the trial of Madoff trustee Irving Picard’s claims against Mets owners Fred Wilpon, Saul Katz and a group of related defendants. He told the parties he would decide what evidence should go to trial, set to begin March 19 in Manhattan. Picard sought to bar evidence relating to the SEC’s role.
Separately, Picard sought to bar evidence about his fees from the trial. He and his law firm, Baker & Hostetler LLP (1155L), have charged about $273 million in fees for liquidating the Madoff firm since it collapsed in December 2008.
Rakoff ruled on March 5 that the Mets defendants must give up as much as $83 million in fictitious profits from Madoff’s Ponzi scheme and face a trial over whether they acted in bad faith, a decision that could cost them $303 million more, he said.
The parties said they expect the trial to take 10 days, which may result in a verdict before the team opens the season against the Atlanta Braves on April 5.
Madoff, 73, pleaded guilty in 2009 to orchestrating what prosecutors called the biggest Ponzi scheme in history, and is serving a 150-year sentence in a federal prison in North Carolina.
The case is Picard v. Katz, 11-cv-03605, U.S. District Court, Southern District of New York (Manhattan).
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