NEW YORK - (Mealey's) The owners of Major League Baseball's New York Mets and the liquidation trustee of Bernard L. Madoff Investment Securities LLC (BLMIS) agreed on March 19 to a $162 million settlement of claims relating to the defendants' alleged profiting from Madoff's massive Ponzi scheme (Irving H. Picard v. Saul B. Katz, et al., No. 11-3605, S.D. N.Y.).
(Memorandum of understanding. Document #88-120326-051B.)
According to the memorandum of understanding filed jointly by Picard and the 11 general partners of Sterling Equities, including Mets owners Fred Wilpon and Saul B. Katz and nearly 50 family members and related entities, in addition to the $162 million settlement, the parties have agreed to a release of all further liability.
The defendants will be allowed to pursue their customer claims against BLMIS and will be entitled to "full recovery" on those claims. The only exceptions to the customer claims recovery are that the defendants will not be entitled to an advance of their funds and that their recoveries "will be assigned" as set forth in the memorandum of understanding.
Picard filed an amended complaint in the U.S. Bankruptcy Court for the Southern District of New York, alleging that the defendants violated various provisions of the Bankruptcy Code and the New York Debtor and Creditor Law. In particular, he claims that the defendants received more than $1 billion in fraudulent gains from BLMIS as part of Madoff's Ponzi scheme.
He sought to recover more than $295 million in allegedly fraudulent transfers and more than $710 million in additional fraudulent transfers of principle from the defendants.
The defendants moved to dismiss, and Judge Jed S. Rakoff substantially granted the motion and narrowed certain of Picard's remaining claims.
Picard then moved to have Judge Rakoff certify the three key rulings in his opinion for interlocutory appeal or at least enter a final judgment as to those claims that have been dismissed so that they may be immediately appealed.
Judge Rakoff denied Picard's motion, ruling that he is not entitled to final judgment or interlocutory appeal of the judge's ruling dismissing a majority of his claims because granting his requests will only serve to delay the "ultimate termination of the litigation."
On Jan. 20, the defendants moved for summary judgment, and Picard moved for partial summary judgment.
Judge Rakoff granted Picard's motion and denied the defendants' motion in a March 5 order, ruling that Picard may be entitled to recover more than $83 million from the defendants because he has shown that the "value" the defendants gave to BLMIS is "equal to the amount of their investment."
Picard is represented by David J. Sheehan, Fernando A. Bohorquez Jr. and Keith R. Murphy of Baker & Hostetler in New York.
The defendants are represented by Karen E. Wagner, Dana M. Seshens, Robert B. Fiske Jr. and Robert F. Wise Jr. of Davis Polk & Wardwell in New York.
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