The should-have-known standard

Irving Picard, the trustee trying to recover funds for victims of Bernard Madoff's Ponzi scheme, updated reporters on his progress in a conference call Tuesday afternoon. Picard said he had roughly recovered $10 billion, after some minor legal hurdles, toward the $20 billion stolen.

Picard would not talk about individual cases, but one question was particularly revelant to Fred and Jeff Wilpon and Saul Katz. On the topic of whether certain people should have known about Madoff not being legitimate, which is the basis of Picard seeking $1 billion from the Mets ownership family as opposed to the $300 million in alleged false profits, fellow attorney David Sheehan said:

"As we've alleged in a number of the complaints, what you would have seen, for example, with regard to a particular issue -- I'm using this only by way of example, say Exxon -- what you would see is that on a given day, the amount that was purportedly traded by Mr. Madoff in connection with one of his transactions .. with his 'split-strike conversion' strategy, that the market volume of the day was exceeded by the alleged trades engaged in by Mr. Madoff. The same thing is true with regard to the options he was supposed to be trading at that time. So, therefore, it was readily available information to individuals if they were just doing, quite frankly from our perspective, their job. Looking at the activities that were transpiring in the account, measuring them against the real world, they would have seen those volumes of transactions could not have taken place. It would have led to a series of other questions. I use that only by way of example of many things that were in the account that people of that kind of financial background would have been able to see.

"There are many other things, as you know, that we have alleged. That, in particular, is one that jumps out at you -- that the volume being dealt with in connection with these transactions was such that you could have checked readily information and found out the volumes were not real."