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Monday, March 21, 2011

The Great American Pastime: Securities Fraud Investigations

With Opening Day less than two weeks away, we approach baseball season with a certain resigned dread. Things don't look good for our New York Mets. After yet another disappointing season last year, the front office did pretty much nothing over the off-season to improve the team, On the other hand, given the results of their last few off-seasons, when they did make significant "improvements," we can't automatically assume this is a bad thing.

No doubt part of the reason the Mets have had such an uneventful winter is the fact that the team's owner, Fred Wilpon, is a target of an investigation by Irving H. Picard (who we have it on good authority is the great-great-great-great-great grand-uncle of Captain Jean Luc Picard of the USS Enterprise), the trustee for Bernie Madoff's defrauded investors. Wilpon and his partners were major investors in Madoff's business. Picard argues that Wilpon must have known that Madoff was actually running a gigantic Ponzi scheme, and was thus complicit in the criminal enterprise. Picard wants to recoup about one billion dollars from Wilpon and company to redistribute to Madoff's victims.

From everything we read, Fred Wilpon seems like a decent man, but essentially he's in a no-win situation. If he did know about Madoff's fraud, then he's a criminal. He claims, however, that he did not know:
"In the court papers, Mr. Wilpon and [his partner Saul] Katz portray themselves and their partners at Sterling Equities, their corporate holding company, as relatively unsophisticated securities investors who trusted Mr. Madoff and who effectively turned over control of hundreds of millions of dollars in investments to him."
In other words, not guilty by reason of stupidity.

As a Mets fan who has suffered greatly over the last few seasons, the Solipsist is inclined to believe this defense.

"Mets Owners Rebut Charges in Madoff Suit"

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