The Hint of A Guilty Conscience?

Bernard Madoff's mugshot

Image via Wikipedia

There is a great piece in today’s New York Times….the lead story on the front page written by Diana B. Henriques…..centering on the first interview for publication with Bernard Madoff.

Diana is researching and then writing a book for Henry Holt & Company on the Madoff scandal, “The Wizard of Lies: Bernard Madoff and the Death of Trust,” for publication this spring.

In a recent and wide-ranging two-hour interview that came after several e-mail exchanges, Madoff essentially said that several of the banks and large hedge funds who had invested in his business “had to know” that things were amiss at his company and were somehow “complicit” in his elaborate fraud, pointing to their “willful blindness” and failure to examine discrepancies between his regulatory filings and other information available to them.  His most damning statement; “They had to know. But the attitude was sort of, ‘If you are doing something wrong, we don’t want to know.'”

Wow.  From the head of the snake himself.

Madoff has met several times with the team from law firm Baker & Hostetler, led by Irving H. Picard,  to reclaim the money invested in Madoff’s firm that has virtually disappeared.  Initial reports stated that number as $65 billion but Madoff argues that Picard’s responsibility to those investors was a more realistic $20 billion.  Interestingly,  Picard’s team has filed hundreds of civil lawsuits seeking approximately $90 billion in damages and fictional profits withdrawn over the years and to date, Picard has recaptured roughly $10 billion.  

As most of us know, defendants in those cases include the Wilpon/Katz families, JP Morgan Chase and several other high net worth individuals and hedge funds.

In earlier posts, I have essentially shown my interest in this whole mess revolves around the actions of Sterling Equities, owned by the families of Fred Wilpon and Saul Katz, whose holdings include commercial real estate, hedge funds, the New York Mets and a majority stake in the regional sports network SNY.   

Madoff and the Wilpon/Katz team had established a deep friendship dating back to the mid-80’s and Sterling was one of Madoff’s earlier investors.  Madoff Trustee Picard has been hired to represent the interests of those swindled by Madoff and is in the process of reclaiming the money they had invested in Madoff funds that seemingly disappeared.

Regarding the Wilpon/Katz team,  Madoff says “They knew nothing.  They knew nothing.”

And that’s the rub, right?  On the one hand, Madoff admits that many in position to know, did in fact know, and chose to look the other way.  Picard lumps the Wilpon/Katz team in that group. Madoff excludes them.

I have to think that Madoff has some sliver of a conscience and he is doing his best to help his long time friends Wilpon and Katz, who essentially got his entire scheme launched through their early investments.  It’s fairly difficult, for me, to suddenly believe the guy who operated what must be the largest fraud in financial history for over 20 years… he tells the truth?   Sorry, I don’t buy it.

The Wilpon/Katz team and Picard seem to be in the path of a head on collision.  Wilpon/Katz claim to be big losers in this fraud of roughly $500 million and therefore owe the Trustee nothing….and Picard sees them as responsible parties to the fraud, skimming “profits” on the fly and using those “profits” to fund other businesses that eventually made even more money, suing them for anywhere between $800 million and $1 billion.

How do they settle their differences out of court? The spread is so big…that should either party blink and accept anything else, it would signal a complete over-reach on their part.  Ex-NY governor Mario Cuomo has been brought in to mediate the dispute and his findings/summary is neither available to the public nor binding in court. I just don’t see him negotiating a settlement and instead, think this all plays out in the courtroom.

More to come as the details continue to come forward……


Mets COO Jeff Wilpon met the press in St. Lucie on Wednesday and among other things told Met fans “…we’re going to make sure all the resources are here and continue to run this team the way it’s been run.” I think most Mets fans would agree that this ship has been run into the ground and is best evidenced by this terrific article, written by NYT columnist George Vecsey’t%20know%20%20%20%20&st=cse   For all of us self-made working stiffs, I have to wonder if Jeff Wilpon still have a job if Daddy didn’t own the team….


About balleehoo

Happily married to Patty and helping to raise two kids...Kat (23) and Kevin (21). Who is luckier than me?
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