Wilpon Blindness
By It’s becoming increasingly clear that the Wilpons are going to have to sell the Mets. I actually believe that the Wilpon and Katz never had direct knowledge that Madoff was running a Ponzi scheme, if only because it was very strongly in their interest not to find out. But the evidence of willful blindness in the trustee suit is pretty compelling:
¶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.
¶Merrill Lynch, the investment bank that acquired 50 percent of Sterling Stamos in 2007, had a prohibition on investing with Mr. Madoff and told Mr. Katz that Mr. Madoff’s operations would not meet its standards.
¶Ivy Asset Management, which was approached in 2002 to advise Sterling Stamos, told Mr. Katz and two of his partners of its suspicions about Mr. Madoff’s investment business.
¶A consultant to Sterling Stamos told Mr. Katz in 2003 that the consultant “couldn’t make Bernie’s math work.”
And this is on top of the general difficulty I have believing that sophisticated investors could believe that someone picking stocks could consistently deliver positive returns for decades irrespective of the market. And while at least the people who convinced themselves that Madoff could make them 12 points a year investing in T-Bills were hurting only themselves, Wilpon and Katz apparently actively recruited people into the Ponzi scheme, which gives them an added responsibility to have been more diligent.
Should their willful ignorance be considered criminal? Perhaps not. But given the profits they made, should they have to pay back a ton of money to the less sophisticated investors Madoff defrauded? It’s hard to escape the conclusion, and it’s hard to see how they keep the team given this.