Moreover, the agreement provides a way for the Mets owners to recover all or part of the $162 million through their own claims, totaling $178 million, against the Madoff estate.
A jury of nine was to have been seated this week to determine whether the defendants could prove they were not "willfully blind" to the fraudulent activities for which Madoff is serving a 150-year sentence after conducting the largest investment fraud in U.S. history.
With the settlement including language forbidding any claims that have been or would have been made in the lawsuit, the plaintiffs no longer can claim Wilpon and Katz were willfully blind in their dealings with Madoff.
"As we said from the beginning when this lawsuit started, we were not willfully blind, we never [were], we acted in good faith," Wilpon said. "And we're very pleased that this settlement bears that out. That's very important to us."
For Wilpon, who has been an owner of the Mets since 1980 and the team's chairman and chief executive officer since 2002, the settlement means he can turn his attention to his businesses, specifically the Mets.
"The first order of business and the first priority will be getting down to Florida tomorrow, getting to the Spring Training camp, and trying to bring the New York Mets back to the prominence that our fans deserve and the city of New York deserves," Wilpon said to the media gathered on a sun-drenched morning outside the Daniel Patrick Moynihan U.S. Courthouse. He asked Mets fans to "stick with us."
Katz, who along with Wilpon was the co-founder of Sterling Equities and now serves as the Mets' team president, said he was also looking forward to getting past the "negative energy" that he said had pervaded their lives and the Mets franchise over the past two years.
"We can now refocus our lives on taking care of our families, our business and our community involvement," Katz said. "This is something [that means] we can now use absolutely healthy, good, positive thinking and get rid of the negative that we were living with."
According to attorney Robert F. Wise of Davis Polk and Waldwell, which has been representing the Mets owners, the settlement is based on withdrawal of profits during a six-year period before Madoff's arrest in 2008, which is the same timeframe used in other litigation by the trustee. Also, through the fourth year of the agreement, the payments on the $162 million will come from recoveries of their own against the Madoff estate; whatever balance is left on the $162 million at that point, the Mets owners will pay in even annual payments over the ensuing two years.
"The settlement that was announced in court this morning brings to an end litigation and affirms that Mr. Wilpon and Mr. Katz and their partners acted at all times with the utmost good faith, and that they were not willfully blind," Wise said. "The trustee has expressly said in the settlement that after reviewing all the evidence he has decided to drop the willful blindness claims."
David J. Sheehan, the attorney representing trustee Irving Picard in the case, said that in essence the two sides will be "partners" going forward, as the Mets owners work toward getting the $178 million they say they are owed by the Madoff estate and the recovery project for Madoff's victims gets another large settlement. Any money the Mets owners recover from Madoff will go directly to their settlement payment, up to the $162 million.
"I think whenever you have a settlement, it's the result of a very businesslike -- and that's what this was -- negotiation, taking into account both sides' interest," Sheehan said. "This has all the hallmarks of a good settlement in the sense that nobody came away absolutely happy with how it came out.
"But I think ultimately ... the most important thing is that victims now will receive the benefit of $162 million. That's the goal of all the litigation brought by the trustee, to enhance the fund for the victims. This does that."
Madoff, the former chairman of the NASDAQ stock market, pleaded guilty in 2009 to 11 federal felony charges. He is serving his sentence at a North Carolina federal prison.
Picard has said that he has recovered more than $9 billion for Madoff's victims and is pursuing as much as $17 billion. There are approximately 800 more lawsuits the trustee is pursuing.
The trustee originally sought $1 billion and was going to seek as much as $303 million at trial on top of the $83 million Rakoff already ruled could be recovered from the Mets. The burden of proof would have been on Wilpon and Katz in trial -- the judge had ruled that for the trustee to have won the suit and all or some of those funds, the Mets lawyers would have had to have failed to prove they were not willfully blind to Madoff's activities.
Hall of Famer Sandy Koufax, a childhood friend of Wilpon's who also invested money with Madoff, was to have been a witness for the defense. Picard's lawyers were scheduled to produce witnesses who would claim that the Mets owners were warned that Madoff's dealings were suspicious.