Today's BTN story that owners of the New York Mets baseball team have identified preferred bidders for a minority (25%) stake in the team, may help resolve one large, and highly publicized, Madoff lawsuit against a former Madoff investor, according to lawyer James Rothenberg.  Here's Mr. Rothenberg's theory: 

"The sale of a 25% minority interest in the Mets for an amount that pays the Madoff trustee 300 million after capital gains taxes, federal and state, should lead to a settlement."

    Behind The Theory.   Madoff trustee Irving Picard has sued NYMets owners Fred Wilpon and Saul Katz, et al, $1 billion, charging them with enabling the Bernie Madoff's Ponzi scheme by continuing to invest with Mr. Madoff in the face of numerous “red flags” that should have led them to avoid him, which harmed the other investors who continued to invest when the fraud was allowed to continue unabated - i.e., the pair (Mr. Wilpon and Mr. Katz) looked the other way while they benefited from Madoff money.

Even though Mr. Wilpon and Mr. Katz were themselves deceived by Mr. Madoff, the lawsuit seeks to hold them responsible for the indirect benefits they derived from the apparent success of their many investments in Mr. Madoff’s firm, which allowed them to flourish in other areas, including buying the Mets.  Mr. Picard calculated those gains at about $700 million, beyond the $300 million in fictitious profits that he contends the two men collected over the years that he also wants to recover.

Mr. Picard goes into great detail to show that the defendants received numerous warnings that Mr. Madoff’s investment program could not generate the returns it was reporting, yet they continued to invest with him.  The gist of the claim against Mr. Wilpon and Mr. Katz is that although they “knew that Madoff’s returns were almost statistically impossible and sharply at odds with his split-strike conversion strategy, they willfully disregarded any criticisms of Madoff and simply buried their heads in the sand.”

    Conclusion.   In the end, as Mr. Rothenberg surmises, Irving Picard is likely to accept the $300 million as a "clawback" of fictitious profits in exchange for dropping the $700 million claim.  Sounds logical.

For a more details on the $1 billion lawsuit, go to:   [NYT Dealbook, 2/7/11, "Mets Owners Face Novel Claim in Madoff Clawback"]