Judge allows only part of suit against Mets ownersPosted: Updated:
(AP) - A federal judge tossed out most of the claimsbrought against the owners of the New York Mets by a trusteerecovering money for victims of Bernard Madoff's Ponzi scheme,saying the owners could be liable for up to nearly $300 million ifthey were "willfully blind" to the fraud.
U.S. District Judge Jed Rakoff's decision Tuesday cleared awaysome of the legal clouds that had been hanging over the team sincecourt-appointed trustee Irving Picard brought a lawsuit seeking $1billion from Mets owner Fred Wilpon and his associates.
Lawyers for the Mets' owners repeatedly have denied Picard'sclaim that they and their partners should have known roughly $300million they collected from Madoff represented phony profits. Thetrustee had sought a $700 million penalty as well.
Rakoff dismissed nine of 11 counts, limiting Picard's claims tothose alleging actual fraud. He said Picard can seek to recover upto $295 million in profits that were paid out to the Mets' ownersduring the multi-decade fraud by proving they were "willfullyblind" to the fraud.
Otherwise, the judge said, Picard's claim would be limited to$83.3 million, the fictitious profits accumulated by the Mets'owners in the two years before the fraud was revealed.
A March 5 trial date has been set to decide the case, and Rakoffasked the sides to appear in his court Wednesday.
Rakoff was skeptical Picard could prove the Mets' owners met thestandard for the larger amount.
"But why would defendants willfully blind themselves to thefact that they had invested in a fraudulent enterprise?" he wrotein an 18-page decision. He said Picard claimed "it was becausethey felt they could realize substantial short-term profits whileprotecting themselves against the long-term risk."
He said Picard "while less than overwhelming in this regard,pleads sufficient allegations to survive a motion to dismiss so faras this claim of willful blindness is concerned."
Madoff revealed his fraud to federal investigators in December2008 and pleaded guilty to charges several months later thatresulted in a 150-year prison sentence, which he is serving inButner, N.C