More Money Sought By Picard
It’s been almost three weeks since we mentioned Bernie Madoff here — that’s a 2011 record!
But in case you missed it, you ought to be aware that Irving Picard has amended his lawsuit against Sterling Equities, Fred Wilpon, and Saul Katz — he is now seeking over one billion dollars from them on behalf of the victims of Madoff’s ponzi scheme.
Fred Wilpon’s response, per The New York Times:
“The amended complaint is the latest chapter in the work of fiction created by the Trustee,” Fred Wilpon and Katz said in a statement. “We will pursue a vigorous legal defense that will set the record straight and vindicate us.”
Is that a denial of the allegations? Hmm … perhaps a “will the sun come up tomorrow?” retort would’ve been more appropriate.
The New York Times and the Wall Street Journal both have in-depth analysis of the amendment by Picard, which focuses on an interest-free, $54M “loan” by Madoff wired directly to Sterling Equities to cover the cash needed for the company to buy out their TV contract with Cablevision. Strangely, the loan was falsely identified on Sterling letterhead as an “investment” made by Ruth Madoff in the creation of SNY. What was wrong with this loan / investment?
From The Times:
For Picard, it seems clear, the deal is important in two ways:
As he asserts elsewhere in the lawsuit, Picard says Wilpon and Katz used Madoff and his money as their own bank, a source of loans that they would not have to disclose to the many banks from which they were, year in and year out, borrowing vast amounts of money.
It established that Madoff was willing to participate in what amounted to a shady transaction, a fact, Picard asserts, that was one of many reasons Wilpon and Katz had to wonder about just how legitimate Madoff’s investment operation was.
The loan and the fraudulent investment letter, the lawsuit says, demonstrate that Katz and Wilpon “were on notice that Madoff would work with them to knowingly falsify a significant business transaction.”
Another key point in the amendment, as reported by WSJ:
The complaint also claims that the design of Sterling’s new credit facilities, set up in the wake of the Madoff scandal, give the lenders priority over other vicitims in collecting revenue if the company is forced to sell its assets. Mr. Picard alleges that arrangement shows the Mets owners knew the danger that their relationship with Mr. Madoff posed.
Irving Picard is also targeting the charities of the Wilpons. Per ESPN-NY:
Tax returns from 2008 obtained by ESPNNewYork.com show conflicting information, with a Wilpon foundation claiming a loss and also showing a profit from Madoff investments.
Michael Kline, a partner at Fox Rothschild LLP in Princeton, N.J., who teaches classes at the Wharton School of Business centering on the Madoff scandal, explained to ESPNNewYork.com in February how Wilpon-associated charities appear to have benefited from the Ponzi scheme, in addition to actual family members.
“I had written about six months ago about the Judy and Fred Wilpon Family Foundation, which they started, which you can get the tax returns from online because they’re matters of public record as a private foundation,” Kline said. “In the 2008 one, filed in 2009, it’s interesting. It indicates a loss — they filed that they were victims. And what was interesting, if you look more closely, it appears the foundation got distributions of $1 million more than the foundation actually paid into Madoff on a separate form they attached.”
Picard’s lawsuit actually places the alleged “fictitious profits” figure for that one charity alone at $2,230,588.
A bit off the subject, but somewhat related, are two other items. The first is actually from over two years ago, and refers to a reprint of an article written seven years before that; it is a Barron’s piece titled What We Wrote About Madoff. Intriguing; essentially, it is a story from 2001 that wondered if Bernie Madoff’s reported earnings and investments were on the up-and-up.
Also interesting: Moammar Gadhafi refused offers by Madoff and Allen Stanford to invest in what we now know were ponzi schemes. There’s something clever to say about this, I’m sure, but even I am getting a bit tired of these tribulations. If nothing else, I never thought this blog would ever mention colonel Gadhafi.