Source: Trustee targets Wilpon charity

Updated: March 15, 2011, 9:37 AM ET
By Adam Rubin | ESPNNewYork.com

PORT ST. LUCIE, Fla. -- The trustee seeking to recover money to distribute to victims of Bernard Madoff's Ponzi scheme plans to go after more funds associated with the owners of the New York Mets in an amended lawsuit, a source within baseball told ESPNNewYork.com.

Trustee Irving Picard already is seeking $1 billion from Mets principal owner Fred Wilpon and his family to redistribute to Madoff victims. The original suit was filed Dec. 7 and was unsealed last month.

U.S. Bankruptcy Judge Burton R. Lifland recently granted Picard until Friday to amend the lawsuit. Picard is expected to add charitable funds operated by the Wilpons in the revised lawsuit, according to a source. Those funds also had alleged "fictitious profits" -- more money withdrawn than invested.

A spokesperson for Picard said she was not authorized to comment, citing the pending litigation and the matter being in mediation.

Former New York Gov. Mario Cuomo has been appointed by Lifland to mediate the dispute.

Tax returns from 2008 obtained by ESPNNewYork.com show conflicting information, with a Wilpon foundation claiming a loss and also showing a profit from Madoff investments.

Michael Kline, a partner at Fox Rothschild LLP in Princeton, N.J., who teaches classes at the Wharton School of Business centering on the Madoff scandal, explained to ESPNNewYork.com in February how Wilpon-associated charities appear to have benefited from the Ponzi scheme, in addition to actual family members.

"I had written about six months ago about the Judy and Fred Wilpon Family Foundation, which they started, which you can get the tax returns from online because they're matters of public record as a private foundation," Kline said. "In the 2008 one, filed in 2009, it's interesting. It indicates a loss -- they filed that they were victims. And what was interesting, if you look more closely, it appears the foundation got distributions of $1 million more than the foundation actually paid into Madoff on a separate form they attached."

Picard's lawsuit actually places the alleged "fictitious profits" figure for that one charity alone at $2,230,588.

A spokesperson for the law firm representing the Wilpons declined to comment in advance of the amended complaint being filed.

The Wilpons have announced their intention to sell a minority share of the Mets to infuse cash into the organization. The family acknowledged borrowing money from Major League Baseball in November, reportedly $25 million, in order to have the liquidity to meet obligations.

Adam Rubin covers the Mets for ESPNNewYork.com. You can follow him on Twitter.

Adam Rubin has covered the Mets since 2003. He's a graduate of Mepham High School on Long Island and the Wharton School of the University of Pennsylvania. He joined ESPNNewYork after spending 10 years at the New York Daily News.
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