Court gestures
Kaja Whitehouse
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Fred Wilpon WireImage
Just this once, Fred Wilpon, principal owner of the New York Mets, wants to be a loser.
Lawyers for Wilpon are headed to court today in a last-ditch effort to portray him and his partners as victims of Bernie Madoff's massive Ponzi scheme rather than as "net winners" who benefited from the scam.
If Wilpon and his partners prove their case, it could help save them from a looming lawsuit that seeks to claw back hundreds of millions and could cost them control of their most prized asset — the Mets.
The showdown occurs amid news the Wilpons will face additional allegations about how they benefited from the Ponzi scheme if a settlement is not reached by a March 18 legal deadline, according to a WSJ.com report late yesterday that cited a person familiar with the situation.
Wilpon's lawyer, Karen Wagner, has eight minutes this morning to persuade a panel of three appellate court judges that the owners of the Mets shouldn't be forced to give back $300 million in "fictitious profits" they reaped from Madoff's scheme.
Under their reasoning, Wilpon and his partners are "losers" because they lost out on millions that they thought they had made based on Madoff's phony account statements.
Court-appointed trustee, Irving Picard, who has been clawing back billions for Madoff victims using a different kind of logic.
He has sued Wilpon and his partners for the $300 million, arguing they are "net winners" because they withdrew more than they put into the scam and should be forced to return the difference.
Moreover, Picard contends that Wilpon and his partners should kick in another $700 million for turning a blind eye to Madoff's dealings.
While the federal bankruptcy judge overseeing the Madoff mess, Burton Lifland, has agreed with Picard, the Wilpons and other "net winners" are challenging Picard's methods in federal appeals court.
If they prevail, Picard would be limited to going after institutions that earned fees off the fraud, or individuals, such as employees or financial partners, who were complicit in the scheme.
In addition, the final tally of losses would be determined, not by the actual red ink of $20 billion, but the principal plus "paper losses" — a whopping $65 billion. As a consequence, whatever money Picard claws back would be distributed among a much larger group of people.
In their high-profile fight against Picard, the Wilpons have won some unlikely allies, including small investors who would appear to have little in common with the multimillionaire owner of a sports team.
Wilpon's lawyer, Wagner, is speaking today alongside Helen Chaitman and Barry Lax, lawyers known for representing small, individual investors scammed by Madoff.
But both Chaitman and Lax, and many of the investors they represent, said Picard has fallen short in proving the Wilpons were in on the scheme.
"There's no documents, there's no e-mail," said Lax yesterday. "There's no smoking gun."
"Myself and many Madoff investors feel that until that proof is given . . . we will presume they [the Wilpons] are innocent like anybody else," said Richard Friedman, who lost money with Madoff.
To be sure, Wilpon's hope that the court will overturn Picard's manner of determining clawbacks is a long shot. In 2006, the same appeals court ruled in favor of Picard's method of calculation in a separate case, and the author of the opinion is one of the judges in today's appeal effort. kwhitehouse@nypost.com
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