Ponzi schemes have a very short shelf life in the world of news. A guy in a suit and tie is arrested, you hear from the investors that lost money, and a few days later the story is soon forgotten. The Madoff case, however, seems to be an ongoing saga that has no end. The latest twist is that the trustee appointed by the government is suing the owners of the New York Mets. According to reports, the owners of the Mets earned approximately $300 million from their investments with Bernard Madoff. The trustee wants this money to be returned to benefit those that lost money in the decades-old scam.
Most people don’t have an extra $300 million sitting around, and the Mets owners are no different. As a result, they may be forced to sell a stake in the Mets franchise to raise the money if they lose in court. I can see both sides on this one. On the one hand, it makes a lot of sense to ask those that profited to return the money for the benefit of those that lost in the scheme. In fairness, however, how many years should an investor be required to go back and return money that they believed to be legitimate earnings?
The most outrageous part of the trustee lawsuit is the allegation that the Mets ownership group turned a blind eye to the Madoff scam and that they should have known they were receiving this money illegitimately. This charge is really hard to swallow when you consider that the Securities and Exchange Commission did not catch on to Madoff even after being given multiple tips over a ten year period.
It made headlines recently when the widow of Jeffrey Picower agreed to return $7 billion in profits made from Madoff (Picower drowned last summer in his backyard swimming pool) .
Other lawsuits in the Madoff case:
JP Morgan is being sued for more than $6 billion for allegedly assisting Madoff in the scheme.
A lawsuit against the Securities and Exchange Commission for negligence in not uncovering the scheme sooner.
I don’t know if we will ever learn the entire truth about the Bernard Madoff scheme and how many people were involved, but I am not convinced that going after investors like the Mets ownership group is justifiable. Of course, if it can be proven that they knew what was going on or were complicit in the operation, I would feel completely differently. What do you think? Use the comment section below to voice your opinion.
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