New York (HedgeCo.net) – In the upcoming May 30th issue of The New Yorker, the article by Jeffrey Toobin, “Madoff’s Curveball”, covers the the money Fred Wilpon, the chairman and chief executive of the New York Mets, lost in Madoff’s hedge fund Ponzi scheme and what it means for Wilpon’s future with the Mets. Tobin also speaks with Madoff about his take on the events.
Wilpon made his fortune in real-estate development, and his company, Sterling Equities, has bought or developed 25.2 million square feet of commercial property, sixty-five thousand residential units, and 8.7 million square feet of retail property, and sports complexes. He was introduced to Bernard Madoff by his son, Jeff, who had become friendly with Madoff’s son Mark.
Toobin writes that “for a few years they had contact only through their sons. Then Madoff made a casual offer to manage some of Wilpon’s money.” Wilpon, his family, and his friends began sending Madoff money to manage in the mid-eighties, and Wilpon tells Toobin, “we jumped in very small. And, as the years went, it became more and more and more and more.”
Eventually, the Sterling cluster became one of the largest single groups of Madoff investors; the day Madoff was exposed, Wilpon and his partners’ stake was listed at about five hundred and fifty million dollars, all of which vanished. The story became even darker for Wilpon when Irving Picard, the lawyer who is the bankruptcy trustee charged with salvaging assets to compensate Madoff’s victims, filed a lawsuit against Wilpon and his partners.
Toobin writes, “Picard was treating Wilpon the way he treated those he believed to be complicit in Madoff’s fraud. From this group, Picard was seeking a refund of their Madoff principal, not just their profits. Specifically, he was demanding that Wilpon pay damages of approximately a billion dollars.”
The Wilpon team believes that Picard and his top deputy, David Sheehan, “have shown excessive zeal in pursuing the case,” and Madoff agrees. “When Sheehan and his assoc. were down here taking my statements for four days, I kept on insisting that Fred and Saul knew absolutely nothing of my crime,” Madoff tells Toobin, in an e-mail. “He kept on rolling his eyes at me.”
Toobin talks to Sandy Koufax, who is an old high-school friend of Wilpon’s and who also lost money with Madoff, whom he was introduced to by Wilpon. “I don’t believe he would ever do anything unethical,” Koufax says, of Wilpon. “I don’t believe he would have allowed me to put what limited money I had into something that was illegitimate.”
To this day, Toobin writes, “Madoff talks about his investment strategy as if it were a finely tuned instrument that just went a little off at some point,” but that he “is contrite—sort of.” Still, Madoff speaks about his financial acumen with unmistakable pride. “The strategy that I was using for them, whether it was real or not, was not something that anyone would understand if you were not an expert.”
He tells Toobin that Wilpon “must feel that I betrayed him, as do most of my friends who were involved. Hopefully, they will understand the pressures I was under. I made money for them legitimately to start, but then I got trapped and was not able to work my way out of it. It just became impossible for me to extricate myself, or even try and extricate myself.”
Toobin writes that for Wilpon, “the combination of his financial troubles and the value of the Mets—perhaps more than a billion dollars—has driven speculation that he will have to surrender control of the team,” which he has run for more than half of his adult life. “It’s really tragic,” Madoff tells Toobin. “I feel terrible about everything that he’s going through.” Madoff says that Wilpon and Katz “were only guilty of trusting their friend and I will live with that guilt and shame forever.”
Editing by Alex Akesson
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