Judge Says NY Mets Case Over Madoff Deserves Jury

Reuters

The trustee seeking money for Bernard Madoff's victims has a constitutional right to have his $386 million lawsuit against owners of the New York Mets baseball team heard before a jury, a federal judge ruled on Wednesday.

U.S. District Judge Jed Rakoff in Manhattan rejected the owners' contention that the Seventh Amendment does not give trustee Irving Picard a right to have a jury rather than the judge decide the case from the bench. He said courts must "jealously guard" litigants' Seventh Amendment rights.

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Picard accused Mets owners, including Fred Wilpon and Saul Katz, of fraudulently taking money out of Bernard L. Madoff Investment Securities LLC, which the trustee is liquidating.

Rakoff rejected the Mets' argument that Picard did not have the right to a jury trial because he, like Madoff's firm itself, could not bring fraudulent transfer claims.

"This confuses the right to a jury trial with a right to bring a claim," Rakoff wrote. "(Madoff's firm) might well be barred from bringing fraudulent conveyance claims on the facts of this case; but if it could bring such claims, it would have a right to a jury trial on those claims."

A Mets spokesman declined to comment. Rakoff has set a March 19, 2012 trial date.

Picard originally sued the Mets owners, who were longtime Madoff customers, for $1 billion, saying they "willfully blinded themselves" to "red flags" of Madoff's fraud.

On Sept. 27, however, Rakoff threw out nine of Picard's 11 claims, and said he could try to recover "fictitious" profits and principal only in the last two years of the Ponzi scheme, not the last six years as the trustee sought.

Another part of that decision limited recoveries related to sums withdrawn during the last 90 days of the fraud, known as preference claims. Picard is trying to appeal the decision.

The Mets owners have denied the trustee's allegations.

Madoff's fraud was uncovered on Dec. 11, 2008. Former New York Governor Mario Cuomo has mediated the Mets dispute. Madoff, 73, is serving a 150-year prison sentence.

The case is Picard v. Katz, U.S. District Court, Southern District of New York, No. 11-03605. (Reporting by Jonathan Stempel in New York; Editing by Tim Dobbyn)