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Madoff-New York Mets, BNY Mellon, UBS, JPMorgan, Facebook in Court News

06 Mar 2012


The New York Mets owners have to give up as much as $83 million in illegal profits from Bernard Madoff’s Ponzi scheme and face a trial over another $303 million of their own money to determine if they acted in bad faith, a judge ruled.

U.S. District Judge Jed Rakoff refused yesterday to dismiss the suit as baseball team owners Fred Wilpon and Saul Katz had asked. Rakoff ruled that Madoff trustee Irving Picard can claim as much as $83.3 million without a trial. Picard seeks another $303 million, and must prove to a jury that the Mets owners and other defendants were “willfully blind” to the fraud.

“The court remains skeptical that the trustee can ultimately rebut the defendants’ showing of good faith, let along impute bad faith to all the defendants,” Rakoff said in his ruling in U.S. District Court in Manhattan. “The principal issue remaining for trial is whether the defendants acted in good faith when they invested in Madoff securities in the two years prior to bankruptcy or whether, by contrast, they willfully blinded themselves to Madoff’s Ponzi scheme.”

The trial is set to start March 19 in Manhattan court. The fraud cost investors an estimated $20 billion in principal, Picard has said.

In his suit, Picard tried to show the Mets owners blinded themselves to Madoff’s fraud because it benefited their businesses, ranging from the team to real estate. Wilpon and Katz countered by saying they trusted their money manager. Both sides presented conclusions disguised as facts, Rakoff said.

The jury will be asked to decide whether Picard can take back principal the defendants withdrew from Madoff’s firm over two years or transferred to others, and what the status of their claims against the Madoff estate should be, Rakoff said.

Rakoff last year threw out most of Picard’s $1 billion lawsuit against the owners, saying Picard could pursue only $386 million at trial. Yesterday he said Picard he would rule later on how much of the $83.3 million Picard can claim without trial. The sum represents fictitious profit got from the Ponzi scheme in the two years before the con man’s 2008 arrest.

David Newman, a Mets spokesman, didn’t immediately respond to an e-mail asking if the team owners would appeal Rakoff’s eventual decision on the profit. Amanda Remus, a Picard spokeswoman, didn’t immediately respond to an e-mail seeking comment on the ruling.

The case is Picard v. Katz, 11-cv-03605, U.S. District Court, Southern District of New York (Manhattan).

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Madoff-Related Lawsuit Should Be Dismissed, BNY Mellon Says

Bank of New York Mellon Corp. asked a court to dismiss a lawsuit filed on behalf of three funds that accused the company of negligence relating to Bernard Madoff’s Ponzi scheme.

In a lawsuit filed in New York State Supreme Court in December, the so-called Rye funds accused the bank and its BNY Alternative Investment Services unit, which served as fund administrator, of acting with “gross negligence” and helping funnel billions of dollars into Madoff’s scheme.

BNY Mellon provided “purely administrative services” for the funds, such as mailing account statements, processing customer subscriptions and calculating each fund’s net asset value, the bank said in court documents filed March 2.

“BNY Mellon had no role whatsoever in selecting the Rye Funds’ investments, monitoring those investments, recommending new or different investments or determining whether investments were suitable (or, indeed, fraudulent,)” the New York-based bank said in the filing.

The case is Plaintiffs’ State and Securities Law Settlement Class Counsel on Behalf of the State Law Subclass and the Securities Subclass in “In re Tremont Securities Law, State Law and Insurance Litigation” v. Bank of New York Mellon Corp. (BK), 653415/2011, New York State Supreme Court (Manhattan).

Lawyer Who Spotted Broker Fraud Rewarded With 5-Year SEC Ordeal

When Theodore Urban, general counsel at Ferris, Baker Watts Inc., spotted and questioned a broker’s suspicious trading patterns in 2007, he triggered a five-year probe by U.S. regulators who said he failed as a supervisor.

After the U.S. Securities and Exchange Commission began its investigation, Urban, who had worked at the SEC and U.S. Commodity Futures Trading Commission before joining the broker- dealer, said he had urged senior executives to fire the broker. Even though an administrative law judge exonerated him, his ordeal didn’t end until Jan. 26, when the full commission dismissed the matter without an opinion.