NEW YORK -- U.S. District Judge Jed S. Rakoff, who's overseeing the $1 billion suit against the owners of the New York Mets, said Friday that he will rule on whether the case will go to trial by the end of September.
The suit, brought on by Irving Picard, seeks to recover approximately $300 million in "fictitious profits" that the Wilpons and other associates of their firm, Sterling Equities, allegedly gained through Bernie Madoff's Ponzi scheme. It also aims to recoup $700 million invested in Madoff by Sterling.
Picard is the trustee seeking to recover money lost by net losers in Madoff's fraud.
Lawyers for Picard and Sterling appeared before Rakoff on Friday at the federal courtroom in lower Manhattan to hear the merits of the Wilpons' motion to have the suit dismissed.
After listening to arguments from both sides, Rakoff said he will rule on the motion -- essentially determining if the matter will go to trial -- by the end of next month.
Rakoff reopened the discovery phase for lawyers on both sides and set a preliminary trial date for March 5. Rakoff continually cautioned that no one should read anything into his decision to set a trial date, noting that he still had the option to dismiss the case.
If the case does go to trial, it will last a maximum of 14 days and will be heard in front of a jury. It will likely remain in district court.
One issue argued in depth on Friday was whether or not the Wilpons knew that Madoff was running a Ponzi scheme.
Picard has argued that the Wilpons should forfeit their $700 million principal investment because he alleges they were sophisticated investors who had warning signs a fraud might be taking place, yet disregarded those red flags.
David Sheehan, an attorney for Picard, cited the Wilpons' alleged exploration into the purchase of fraud insurance as evidence that they knew Madoff was running a Ponzi scheme.
"Why shop for fraud insurance if you didn't know it was (a) Ponzi (scheme)?" Sheehan said at one point in the proceedings.
But Karen Wagner, an attorney for the Wilpons, disputed the claims.
Wagner said that the Wilpons knew "nothing (that) led them to believe that Madoff was trying to defraud them."
To support that claim, she cited the fact that the Wilpons invested large sums of money with Madoff.
Wagner said it was "crazy" to think "someone would put $500 million at risk instead of taking the money out" of the account, if they had known it was a Ponzi scheme.
Regardless of Friday's courtroom wrangling, most legal experts agree that the Wilpons will owe at least the "fictitious" profit of $300 million.
On Tuesday, a three-judge panel essentially found that anyone who withdrew more money than was invested with Madoff has to return that profit so that other Ponzi scheme victims -- or net losers - can be compensated.
"They have other people's money -- $300 million dollars of it," Sheehan said of the Wilpons on Friday.
What is unclear is how a potential $300 million verdict against the Wilpons would affect their ownership of the Mets. Aside from this case, the Wilpons have loans against the team exceeding $500 million, according to some reports. They have needed to borrow money from Major League Baseball to cover operating expenses. And they are nearing completion of a deal with hedge fund guru David Einhorn, who will invest $200 million in exchange for a minority share of the organization.
Former New York governor Mario Cuomo has been appointed as mediator in the legal dispute between Picard and the Wilpons. Cuomo said that Friday's hearing helps "elucidate issues ... and gives both sides a better idea on how they want to proceed."
At the beginning of Friday's proceedings, Rakoff provided a moment of levity when he said he was "fortunate" to have read the lengthy legal briefings before the hearing.
"Otherwise, I would have had to watch a Mets game, which would have been a very painful process," he said.
Information from ESPNNewYork.com's Adam Rubin was used in this report.