Via the always-reliable, never sensational Star-Ledger, we have a very damning piece of news from the AP:
http://www.nj.com/mets/index.ssf/2011/05/report_mets_owners_shopped_for.html
According to documents, the Mets tried to insure their Wilpon holdings as far back as 2001. Prudent? Sure. Criminal? Absolutely not.
But there’s more.
Apparently court records recount a document on which Sterling partner Arthur Friedman wrote that the policy should cover “fraud or fidelity” and went so far as to write the word “Ponzi” in parentheses.
There have been many stories regarding the repeated warnings the Wilpons supposedly received regarding the seemingly impossible returns Madoff was providing.
This news raises their awareness to another level. If they were considering insuring themselves against a “Ponzi” situation, they can no longer argue that they had no idea of wrongdoing; they may have actually strongly suspected precisely what was going on as long as a decade ago.
And in the early to middle part of that decade, they were withdrawing operating funds to run the team from Madoff and using the same Madoff accounts they suspected of being the result of a Ponzi scheme or fraud to gain financing for the building of Citi Field. More and more a case can be made that the entire Wilpon Era of the Mets may have been built on fraud.
This may still get uglier if this is true and if there is more evidence like this to come.
18 comments
metsfan4decades
5/20/2011-10:46am at 10:46 am (UTC -4)
I read this last night from another paper – can’t remember who right now.
2001? Isn’t that when they were still partners with Doubleday?
I guess you could interpret this two ways:
1. They suspected, Madoff was operating a ponzi scheme.
2. Someone had the foresight to look into protecting assets – proactive instead of reactive – kind of a risk management type of thing.
I’d have to believe they’re not the only mulit million dollar corporation looking to protect themselves from fraud. Pretty sad state of affairs, when you think about it.
This article doesn’t state one way or another whether they actually got that insurance. I would have to assume they did not.
Mr North Jersey
5/20/2011-11:24am at 11:24 am (UTC -4)
The article doesn’t state one way or another whether they actually got that insurance because this is just an AP story and not something written by the people at the Ledger.
In any event the NY Times wrote a article about the same topic as well but they included a bit more details that may answer your question 4d.
“They have said in court papers that the “allegations” that Klein recommended that Wilpon and Katz obtain fraud insurance were “irrelevant,” in part because Wilpon and Katz determined the insurance was “an unnecessary expense” given their “comfort level” with Madoff.
In sworn testimony, both Katz and Friedman said they had no reason to mistrust Madoff, with whom they had invested for many years, and that as a result, as Friedman said in a deposition, “We didn’t see any need and the cost was very high.”
http://www.nytimes.com/2011/05/20/sports/baseball/mets-looked-at-fraud-coverage-for-madoff-stakes.html
kingman 26
5/20/2011-11:42am at 11:42 am (UTC -4)
“news from the AP”
First sentence.
And whether they got the insurance or not is totally irrelevant.
The fact that they may have suspected it was a Ponzi scheme as early as 2001 is the lead here.
They may not have gotten the insurance because of their close relationship with Madoff, and because they may have known that they would be warned directly or indirectly to get their money out before it all collapsed.
And guess what? They did get their money out in time!
kistics
5/20/2011-11:53am at 11:53 am (UTC -4)
Thought they lost $500M original investment.
TRS86
5/20/2011-11:57am at 11:57 am (UTC -4)
Nah, they actually profited but lost at the same time. LOL. It’s gotten too confusing for me to even care.
The lost money based on what they thought they had in the account but gained money based on what they put in.
So example the put in 50 bucks, thought they turned that into 100 bucks but actually only turned it into 75 bucks. So in theory they gained 25 bucks but in their minds they lost 25 bucks….
stickguy
5/20/2011-2:25pm at 2:25 pm (UTC -4)
they had a net gain over time (more out than in).
but to the point of being warned in time, that sure as hell did not happen, since they had a boatload of money on the books when the crash hit.
Mr North Jersey
5/20/2011-11:58am at 11:58 am (UTC -4)
Sorry Kingman I never meant to intimate anything more that just the reaffirming that like you clearly already said and 4d most surely already read that this was a AP story and not something written by the good writers at the Ledger.
If you felt I was inferring anything negative I apologize. That was not my intent.
Regarding the other stuff if you feel it is irrelevant that is fine as well. I only responded with the info i did cause 4d asked the question. If not for that I would of never bothered to even comment.
Again my apologies for any negative slight you may have felt. It was not my intent.
kingman 26
5/20/2011-12:18pm at 12:18 pm (UTC -4)
No apologies necessary; I just wanted to make sure you knew I was being accurate in my post.
As I sometimes am a bit annoying when it comes to accuracy, I wanted you to know I did accurately credit the source of the piece!!
metsfan4decades
5/20/2011-12:13pm at 12:13 pm (UTC -4)
Thanks for the additional info, Jerz. That may have been the story I skimmed over last night.
TRS86
5/20/2011-11:53am at 11:53 am (UTC -4)
I really don’t care anymore. Of course they most likely did something wrong. What millionaire did everything 100% clean? All I care is for this junk to go away. If that takes the Wilpons, who have invested a ton of money into the Mets, selling the team then so be it. It’s like a manager, while you may not be responsible for the demise you get the ax either way.
kingman 26
5/20/2011-11:57am at 11:57 am (UTC -4)
Agreed all around.
I thought you might like a post on it, as it was major news being reported late yesterday.
TRS86
5/20/2011-12:02pm at 12:02 pm (UTC -4)
Yeah, it’s news and related to the Mets so that’s fine. Just personally I am done with it. To me it’s not really impacting THIS year’s Mets and I will worry about what it does to the future in the future. Kind of like the Jose Reyes story. I will just try and put it into the back of my mind and enjoy baseball for now.
I still think we need to be really careful damning the Wilpons until the entire story comes out. One day it looks like they are the shadiest people in the business and the next day it looks like they were screwed. Honestly I don’t care to ride the coaster of blame.
Ceetar
5/20/2011-12:05pm at 12:05 pm (UTC -4)
my philosophy is wake me up when the trial is winding down. so like..2013 or something.
metsfan4decades
5/20/2011-12:16pm at 12:16 pm (UTC -4)
LOL…yeah, this is likely to go on forever – especially b/c there is some group now going after Picard for his alleged shady practices in his clawback suits.
darknova306
5/20/2011-12:35pm at 12:35 pm (UTC -4)
Now that baseball is actually being played, and the Mets look like they’re hustling and full of ‘giving a sh!t’, I feel no need to pay much attention to this Madoff/Wilpon nonsense anymore.
TRS86
5/20/2011-12:47pm at 12:47 pm (UTC -4)
AGREED!!!!
hazmet
5/20/2011-5:27pm at 5:27 pm (UTC -4)
Thank you, exactly. This amounts to a yawn to me. There is nothing new here, this was all out there and is the 3rd time Picard’s submitted basically the same set of information in the courts. Smacks of getting desperate on his part if nothing else. At least to me. Everyone know’s they were warned, ok, now they supposedly looked for Ponzi insurance, yeah ok – big deal still not criminal. All boils down to if the SEC didn’t know how were the Wilpons supposed to know. I sense the tides starting to swing in their favor as pressure mounts on Picard and his tactics. Hey, I don’t like that they basically used bogus funds to secure enough financial leverage to take total ownership and fund Citifield but at the time they were operating from a position where the holdings were legit even to the SEC so I can’t even b*tch about that.
stickguy
5/20/2011-2:23pm at 2:23 pm (UTC -4)
this does not necessarily mean they suspected a pnzi scheme. It is more insurance since they had so many eggs in one basket.
Probably a more prudent option was to diversify (so that if any one manager pulled a scam, you weren’t sunk), since diversification is essentially a form of self insurance.
Honestly, if 10 years ago they thought that maybe it was a fraud/Ponzi, you have to assume they would have at minimum started drawing down the accounts, or putting new funds elsewhere.
Then again, with this bunch, who knows!