By Dave Mills
Editor's Note: I'd like to welcome contributing writer Dave Mills back to the blog. Please direct any comments or feedback to him. - Mike S.
In the wake of the settlement of the Picard v Wilpon/Katz/Sterling clawback lawsuit, it is imperative that all of us take a deep breath, simplify the scenarios and try to eliminate our personal feelings.
Trustee Irving Picard and his associates played poker and weren't willing to go "all in." Why? Their case was just not strong enough.
The Wilpon defendants analyzed the situation, sat back and played their hand expertly.
It is assumed that the ace-in-the-hole for Picard was the testimony of former Sterling employee Noreen Harrington. However, Ms. Harrington, at the time she advised Sterling, had suspicions and not evidence. Wilpon and Katz may have not heeded her warnings, but that still does not amount to "willful blindness."
Loyalty has gotten us all in trouble here and there, but it still remains a valuable asset in our dealings with others. Take a look around and then compile an inventory of those you are loyal to and those who are loyal to you. Would you walk away from those relationships on mere suspicion? Of course not. In fact, in the face of mere suspicion, most of us would tend to step forward and defend the friends and associates to whom we are loyal.
Once in a great while, such suspicions turn out to be true and we find some way to mitigate, mollify, remediate or walk away from those we were previously loyal to. Unfortunately, we have all dealt with a rogue or two.
The overwhelming argument for the Wilpon group was the incredible malfeasance of the Securities and Exchange Commission. If the SEC, and their huge government funded staff of investigators, lawyers, accountants and financial experts never figured it out, how were Fred and Saul to know? Consistent with the behavior of many predators, Bernie Madoff even befriended Fred and Saul, so perhaps they can be accused of "blind loyalty."
Madoff accommodated Mets ownership by providing large sums from the bogus investment pool when they needed large sums. The paper profits also bolstered their loan portfolios and created leverage for borrowing, from which they most certainly benefited. Madoff strung them along and played them to the hilt. He even bought a luxury suite at Shea year in and year out.
When Sterling looked for financing to build Citi Field and other real estate ventures, they most certainly listed their Madoff investments as assets. Did any of the lenders in their pursuit of due diligence send up a red flag? Are they being held accountable in any way? Of course not.
And lets face it, no matter how much any fan may fault or even deplore Mets ownership, why would Fred and Saul have put so many of their friends, relatives and business associates in a Ponzi scheme they knew about? Sandy Koufax lost most of his life savings, but remains loyal to Fred and was willing to testify in his behalf. This was testimony Picard's office was trying desperately to suppress. Nonetheless, the Koufax testimony would have likely been heard and it would have certainly inured to the benefit of Wilpon. Contrary to Picard's assertions, the jury would not have been star-struck by Koufax, since baseball fans would likely have been left off the jury and Koufax last pitched over 45 years ago. Instead, they would have related to the loyalty between friends and come to the conclusion that Wilpon would never have put a dear friend in the position to lose his life savings if he was even remotely suspicious of the Madoff wrongdoings.
I have a friend who is convinced that Fred and Saul had to know. Listen to sports radio and you'll discover he is not alone. As much as I have some issues with the Wilpon/Katz ownership of the Mets, there is no way these fellows would have risked their reputations, their families, their associates, their businesses and their fortunes if they had any knowledge of the Madoff scam. And there is absolutely no evidence to show that they knew anything, which is exactly why Picard did not, and could not, go "all in."
So, why were smart guys like Fred and Saul in such an untenable position?
A relative of mine (now deceased), who was a very sophisticated and successful businessman as well as a humanitarian, put 92% of his assets with Madoff. What amazed me about my relative's investment with Bernie was not that he had invested, but he had pretty much put all his eggs in one basket, something he never would have advised me and others to do. In this case, as with most of the others and the Wilpon-related investors, greed reared its ugly head. The old saying -- "if it seems too good to be true, it probably is" (and its various permutations) -- was probably never more applicable.
All of us are susceptible to greed. Fred, Saul and my relative were no different. However, all of these gentlemen gave generously to charities and causes. The Mets and SNY do remarkable community outreach. By all accounts, Fred and Saul are very decent people. They made a mistake which they will take to their graves. It is time to cut these guys some slack, stop the vitriol and remember that their potentially recoverable losses (stated at $176 million) will likely exceed the $160 million of the so-called realized profits they have agreed to pay back to the trustee over the next five years (in year 4 and 5). That means they too were victims, no matter what some disgruntled individuals think or say.
Some say the result of this case is good for Mets ownership and OK for the Trustee Picard. I think the result is sustainable. Nobody really wins. In the end, the trustee has increased the recovery pool that is in far better condition than most observers predicted. A couple of years ago, it was speculated that Madoff investors could expect to recover about 25¢ on the dollar. At this point, it could easily be three times that much. Some even say it could be over 90% restitution. I am not sure what lesson that would teach anyone about greed, but Picard may well have done a commendable service to the victims.
For Wilpon and Katz, it is time to move forward and deliver a quality baseball product to those of us who have shown intense loyalty to the Mets. It appears they are on the right track with Alderson and Company. Staying away from the ballpark is not the answer. Sandy Koufax had every reason to be angry with his friend, but he chose to stand with him and proclaim his friend's decency. Who are we to claim otherwise?