Madoff fund trustee pursuits Mets football club

The current legal action by the trustees of the Madoff investment fund ponsi scam is interesting. They are taking the Mets football club to court, arguing that the owners of the Mets benefited from his patronage to the tune of $1 billion. This is interesting because:

1. They are suggesting that these football club owners ought to, or did in fact, know that Madoff was a fraud. This strikes me as a difficult case to make

2. I think the club is more likely to be found liable because it is the recipient of stolen funds. Fraud is no different from stealing, so in what sense is the Mets not the recipient of stolen goods. Its liability however should not be the full amount of the money Madoff invested/contributed, but rather the difference in value, otherwise the Mets, who are less culpable for any fraud, will be punished for a risk that most clearly lies with the investor.

What of the fact that the Mets Stirling family had $500 million invested with Madoff - all of which they lost. Have they lost enough? Well, under law the Stirling family is a discrete business entity separate from the Mets, so one might expect that the trustees have a case.

There is more damming evidence still:

"The chief investment officer at Sterling Stamos, a hedge fund independent of Mr. Madoff in which Mr. Wilpon and Mr. Katz invested, said he repeatedly warned the men and their families that Mr. Madoff’s returns were “too good to be true.” Other senior officers at the Stamos fund expressed similar concerns about Mr. Madoff".

Suspicions though do not constitute evidence. If you present 'suspicions' to the Securities Commission they will not investigate. That is the problem with government regulators, they are politically motivated. Perceptions are more important that facts, and suspicions are less than facts. It didn't have a chance of budging the regulators, so I don't see this as important. I would not have been surprised if there were rumours going around the financial community. There often are, and they are not acted upon.

Much of the lawsuit appears frivolous, however I do think that there is some validity to the lawsuit insofar as 'profits' from the Madoff enterprise, which one credibility through its support of the Mets. No doubt it was an instrument for finding more investors for Madoff.