N.Y. Mets owners settle with Madoff trustee for US$162 million

The trustee for Bernie Madoff's former firm has secured another US$162 million for victims of the massive Ponzi scheme.

A settlement reached Monday between Irving Picard, the trustee for the liquidation of Bernard L. Madoff Investment Securities LLC and the partners of Sterling Equities, including Fred Wilpon, chairman and CEO of the New York Mets, and Saul Katz, president of the New York Mets, have agreed to payback US$162 million over five years. This represents 100% of the fictitious profits they withdrew in the six years before the firm's liquidation proceeding began. A District Court had previously ruled that they were liable for fictitious profits spanning only the two-year period prior to the liquidation.

Claims by Sterling customers against Madoff, which total approximately US$178 million, will be allowed in full and will be entitled to recovery on the same basis as other customers of the firm. Any pro rata distributions will be used to reduce the Sterling settlement obligation. Additionally, the trustee has agreed to dismiss a complaint that alleged that the Sterling parties were willfully blind to the fraud conducted by Madoff.

"The SIPA trustee believes that this settlement represents the best possible outcome for [Madoff] customers with allowed claims, as it provides for the recovery of 100% of the US$162 million in fictitious profits for the six-year period. We believe that this is a fair and just settlement," said David Sheehan, chief counsel to the SIPA trustee.

In response to the settlement, Stephen Harbeck, president of the U.S. Securities Investor Protection Corp., said, "This settlement is in the best interest of the Madoff victims, who will benefit from the additional monies being added to the customer fund for distribution. The decision also provides guidance towards other similar settlements in cases still pending with the trustee."

The settlement was announced Monday in the United States District Court for the Southern District of New York.