Picard, Wilpons continue to spar

May, 19, 2011
Trustee Irving Picard, who is suing Fred Wilpon and Saul Katz and their families for more than $1 billion, filed an answer in U.S. Bankruptcy court to the defendants asking for the case to be dismissed or a summary judgment in their favor.

The simplest version: Picard is opposed to the case being dismissed. He cited emails which attempt to show the Sterling (Wilpons') own hedge-fund managers congratulating themselves for staying away from Bernard Madoff investments after he was arrested. The emails also purport to lament the Wilpons becoming personally involved despite supposed warnings from them. The Wilpons have countered that the warnings were merely recommendations to diversify, not alerts to potential fraud.

Good luck to mediator Mario Cuomo, by the way.

One portion of Thursday's filing reads:

The March 13, 2006 Sterling Parntner meeting minutes state: "[Sterling hedge fund operator] Peter [Stamos] has a concern about [Sterling Equities'] exposure to Madoff."

Further, Arthur Friedman testified that Peter Stamos issued a "warning" to the Sterling Partners sometime between 2002 and 2005 regarding the potential investigation of BLMIS [Madoff funds] and the possible freezing of their accounts with Madoff, and that this warning was reported to the Sterling Partners "at a partners meeting."

It also cites a purported December 2008 email from Peter Stamos, the Wilpons' own hedge fund operator, after Madoff was arrested, which states:

Fortunately our firm did not invest with Madoff. That firm and fund wouldn't make it through our risk and ops controls -- lack of transparency, no third party administrator, etc. Unfortunately, our partners -- Saul and Fred -- against our recommendations invested as individuals and through their real estate firm.

The Wilpons shot back later in the day, sending out this lengthy statement:

For months our reputations and our businesses have been subjected to the Trustee's false allegations, and today's filing recklessly rehashes the same fictitious claims. As the Partners have said all along, they did not know Bernie Madoff was engaged in a fraud. There were no red flags and they received no warnings. The Trustee's opposition papers filed today say nothing different. The only thing the Trustee has debunked is the veracity of his own story.

The Trustee filed a complaint, then an amended complaint, and attacked the Sterling partners in the press, throwing everything he had at them. They challenged him. Now he has responded. And what has he shown? NOTHING.

He has rehashed what is in the amended complaint, he has pointed to documents that he already has cited -- which either support the partners' case or are irrelevant -- and he has done nothing to defeat the truth.

The Sterling Stamos witnesses NEVER warned that Madoff was a fraud. They thought Bernie Madoff was honest, honorable and a securities superstar. No one else warned the partners about fraud. The SEC did not warn about fraud. The Sterling Partners were innocent customers of a highly respected and regulated broker, and the Trustee has shown you NOTHING that changes that reality.

The Trustee took extensive discovery that he continues to REFUSE to disclose. If he had evidence from this discovery to support his claims, he would have included it in his opposition. But he did not. Instead, he says he needs MORE discovery. He also cannot refute the testimony of his chief witnesses, which indisputably contradicts his own complaint.

This was the Trustee's third chance to put forward his evidence, and it is clear: He has no evidence, and no witnesses, to support his baseless claims against the Sterling Partners."

Adam Rubin

ESPN Staff Writer
Adam Rubin has covered the Mets since 2003. He's a graduate of Mepham High School on Long Island and the Wharton School of the University of Pennsylvania. He joined ESPNNewYork after spending 10 years at the New York Daily News.
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