Madoff Had Wide Role in Mets’ Finances
When Fred Wilpon’s son Jeff was married at Fresh Meadow Country Club on Long Island, Bernard L. Madoff and his wife were there. When Mr. Madoff’s son Mark was married at the same country club, Mr. Wilpon, the principal owner of the Mets, was a guest as well.
When the Mets negotiated their larger contracts with star players — complex deals with signing bonuses and performance incentives — they sometimes adopted the strategy of placing deferred money owed the players with Mr. Madoff’s investment firm. They would have to pay the player, but the owners of the club would be able to make money for themselves in the meantime. There never seemed to be much doubt about that, according to several people with knowledge of the arrangements.
“Bernie was part of the business plan for the Mets,” a former employee of the club said.
But Mr. Wilpon involved more than his team with Mr. Madoff. He also encouraged certain friends to invest.
Robert Tischler was such a friend. A onetime fellow commuter on the Long Island Rail Road with Mr. Wilpon — they would meet on the platform of the Manhasset station before Mr. Wilpon made it big — he came to own a piece of an apartment building with Mr. Wilpon and Mr. Wilpon’s brother-in-law, Saul Katz. When the men sold the building in the 1980s, Mr. Wilpon and Mr. Katz, who owns a portion of the Mets, suggested that he invest some of his profits from the deal with Mr. Madoff, he said.
“The numbers were always going up and never going down,” Mr. Tischler said. “I was withdrawing $65,000 to $70,000 a year from my Madoff accounts. They were part of my living expenses.
“It was terrific,” he said, “until the day of the disaster.”
Since the day of the disaster — Mr. Madoff’s December 2008 arrest for orchestrating a $65 billion Ponzi scheme — Mr. Wilpon’s relationship with Mr. Madoff has been generally acknowledged but not well understood. Mr. Wilpon and his family have offered scant details about the friendship, except to indicate they felt deeply betrayed by the scam and were harmed financially.
Now, however, a lawsuit against Mr. Wilpon and Mr. Katz brought by the trustee for victims of Mr. Madoff has suggested the relationship — financially and personally — was deeper than anyone might have suspected. The trustee, Irving H. Picard, has alleged that the two men’s dealings with Mr. Madoff were extensive and longstanding, and that they went on even after suspicions about Mr. Madoff’s operation were raised, according to two lawyers involved in the case.
As a result, according to the lawyers, Mr. Picard has asserted that Mr. Wilpon and Mr. Katz either knew or should have known that Mr. Madoff’s operation was a potential fraud. Mr. Wilpon, Mr. Katz and their lawyers have refused to comment on the lawsuit, which was filed under seal in December in federal bankruptcy court in Manhattan.
But interviews with current and former associates of Mr. Wilpon and Mr. Katz, as well as former employees of the club, former employees of Mr. Madoff and others, make it clear that the relationship was substantial and that the role Mr. Madoff played in the financial life of the ball club and the Wilpon and Katz families was pervasive.
“The relationship between Fred and Bernie became closer and closer because Bernie was returning more and more to Fred in terms of his investments while Bernie is getting exposure from Fred and Saul,” said Jerry Reisman, a lawyer in Garden City, N.Y., who has represented 10 or so commercial real estate investors who lost a total of some $150 million to Mr. Madoff.
“They both relied on one another,” he said. “It was reciprocal, symbiotic. They both relied on each other for money, and Bernie also relied on Fred for contacts.”
One former executive with the Mets recalled how it could work:
“I remember vividly Madoff’s name being brought up a lot when” the team “would negotiate contracts, particularly with deferments,” said the former executive, who would not be identified because he did not want to harm his career in baseball. “That money would be turned over to Madoff.
“And as part of friends and family of the Mets, they offered people the opportunity to invest in Bernie. There was talk about Bernie averaging like 15 percent for the Wilpons. It just seemed too good to be true, but then you think the owner has vetted it.”
Frank Cashen, the former general manager of the Mets who built the team that won the 1986 World Series, said it was his understanding that several million dollars of his deferred compensation had been invested with Mr. Madoff, but that he had been paid. Asked whether it was Mr. Wilpon or Mr. Katz who was more likely to push the idea of investing with Mr. Madoff, Mr. Cashen, who stepped down as general manager in 1991, said, “To me, they operated in unison.”
The Madoffs and the Wilpons raised their children in Roslyn, N.Y., and their sons were friendly. They traveled together occasionally, according to mutual friends and associates. And the three men — Mr. Wilpon, Mr. Katz and Mr. Madoff — came to support and involve themselves in a number of the same philanthropic endeavors.
When Mr. Madoff moved his offices from Manhattan’s financial district, he took up office space in a Midtown building owned in part by Mr. Wilpon’s real estate company.
Three days before Mr. Madoff’s arrest, there was a meeting of the board of the Gift of Life, a bone marrow donor registry. It was held in Mr. Madoff’s office, his former secretary said. Mr. Wilpon was there.
“There was always Fred Wilpon,” said Eleanor Squillari, Mr. Madoff’s longtime secretary. Mr. Katz, she said, was even more of a presence. And Mr. Wilpon’s son Jeff would stop by to visit with Mr. Madoff’s son, Mark, or call and joke with her on the phone. Mr. Madoff, she said, went to Japan with the Mets in 2000. He brought her back a kimono.
Still, Ms. Squillari thought Mr. Madoff was a little more formal around Mr. Wilpon and Mr. Katz.
“Bernie acted differently with Fred than he did with his closer circle of friends — the Shapiros, the Blumenfelds, the Picowers,” she recalled. “They weren’t as chummy. Fred wasn’t part of that clique. Bernie was more businesslike with Fred and Saul.”
She and others interviewed said they were convinced Mr. Wilpon and Mr. Katz did not know about Mr. Madoff’s criminal enterprise. But others interviewed, including two former employees of the Mets, said they were struck, both years ago and in hindsight, by the outsize confidence Mr. Wilpon had in Mr. Madoff. The employees would not be identified because they did not want to embarrass their former bosses, whom they continue to admire.
“It was almost like Fred and the others were marveling over it,” one former employee of the club said. “But it was unclear how Madoff would make the returns or where he would park the money.”
Another former employee said he was offered a chance to invest with Mr. Madoff by Mr. Wilpon and Mr. Katz. He said he asked them, “How does Bernie do it?”
“He’s smarter than everyone else,” he said he was told. “I remember hearing the conversations about how Bernie returned 18 percent. And the answer was that he was a very smart guy who was creative and knows where to make plays. Fred was expressing admiration for Bernie.”
Indeed, the breadth and depth of investing done with Mr. Madoff by the Wilpon and Katz families and their financial holdings, including the Mets, are remarkable. The trustee, in his lawsuit seeking hundreds of millions of dollars from the men, takes aim at roughly 100 accounts held by Mr. Wilpon, Mr. Katz, their families or business operations.
According to an analysis of the list of Mr. Madoff’s 15,000 clients, done by Jamie Peppard, a former financial auditor who has studied the Madoff case, more than 500 accounts can be tied to Mr. Wilpon and Mr. Katz. Mr. Wilpon had at least 17 accounts just under his name, according to her analysis.
The former employees of the Mets said substantial aspects of the club’s financial operations seemed to flow through, or wind up with, Mr. Madoff — annuities set up for players, cash generated by sponsorship deals, and more. The team regularly discussed investing deferred money from long-term player contracts in Madoff accounts. Bobby Bonilla was among the players who had their deferred money put with Mr. Madoff, one former employee said.
In those cases, the players would agree to take less money up front and be paid over a number of years, earning interest. It appears the Mets would be able to keep any money earned over that agreed rate, and Mr. Madoff regularly produced returns that outdid prevailing interest rates.
And when the costs of disability insurance spiked, the former employee recalled, the Mets began to self insure. They did it by investing premiums with Mr. Madoff, he said.
“He was an investment vehicle that existed for Fred and the organization,” one former employee said. He added, “I always wondered why Bernie was smarter than everyone else.”
Jack Begg, Toby Lyles and Jack Styczynski contributed research.