Lawyers for Fred Wilpon told an appellate court today that the owner of the New York Mets is a loser, not a winner.
Bankruptcy trustee Irving Picard, who represents victims of Bernie Madoff's mult-billion-dollar Ponzi scheme, has demanded that Wilpon return $300 million in alleged "fictitious profits" earned through his long-term investments with Madoff. Picard says that Wilpon is a net "winner," having taken out more money from his Madoff accounts than he put in, and that he must pay up. He also alleges that Wilpon, whose relationship with Madoff dates back three decades, owes an additional $700 million because he should have known that his friend was perpetrating a fraud.
Wilpon's attorneys and lawyers for other alleged "winners" told a three-judge panel from the Second U.S. Circuit Court of Appeals Thursday morning that they are actually losers because accounts with balances in the millions and billions suddenly evaporated when Madoff's scam was exposed in December 2008.
"We have presented our arguments to the court. We believe that customers are entitled under law to rely on their account statements, and we are hopeful that the court will endorse this view," Karen Wagner, attorney for the Wilpons, told ABC News.
Picard has argued, and the bankruptcy court has previously agreed, that the balance statements are not relevant because they are fictitious. Judge Burton Lifland wrote that the "account statements bore no relation to the United States securities market at any time. As such, the only verifiable transactions were the customers' cash deposits into and cash withdrawals out of their particular accounts."
Former New York governor Mario Cuomo, appointed by a judge as mediator between Wilpon and Picard, said he didn't know when a ruling could be expected, but that "this should get answered as soon as possible because there are a lot of people in great pain waiting for, hoping for, getting money back. We have to do this as quickly as we can."
Attorney Helen Chaitman, who appeared before the court on behalf of a group of smaller investors who were also dubbed "winners," said she was hopeful the panel would reject Picard's definition. "We're hopeful that the Second Circuit will reverse," said Chaitman. "I'm optimistic about it. It's a complicated issue." Chaitman herself was a Madoff investor but not a "winner," since she never withdrew any funds from her account.
Lawyers working for Picard have reportedly informed Wilpon et al that if no financial settlement is reached by March 18, according to a WSJ.com report, they will add more allegations about investments with Madoff to their suit against Wilpon.
"In the best of all worlds," said Cuomo, the suit will be settled soon. "If we got really lucky, maybe the parties could come together quicker than people expect. That's always a possibility and that's the possibility we try to make a likelihood."
On January 28, just before the details of Picard's suit became public, the Wilpons announced that they would consider selling a 25 percent stake in their baseball team "to address the air of uncertainty created by this lawsuit."