Ruling on tossing suit vs. Wilpons will wait

ESPNNewYork.com contributor Ian Begley, reporting from Federal District Court in Manhattan, said Judge Jed S. Rakoff indicated he will rule on Fred Wilpon and family's motion to toss the $1 billion case by the end of September.

The sides continued offering their viewpoints in court Friday afternoon.

Rakoff set a trial date for March 5, but cautioned not to read into that about his likelihood of tossing the case beforehand.

Trustee Irving Picard is trying to recover funds for victims of Bernard Madoff's Ponzi scheme.

Picard is suing the Wilpons for roughly $1 billion -- $300 million in what he alleges are profits from the Ponzi scheme as well as $700 million in principal, which he wants the Wilpons to forfeit because he alleges they were sophisticated investors who ought to have known what was going on.

Experts believe the $700 million portion may ultimately be rejected by Rakoff, but they still expect the Wilpons to be on the hook for a $300 million "clawback" -- the amount they allegedly withdrew over principal.

The Wilpons offer two arguments against that contention:

1. They argue that the net of all their funds made $160 million, and Picard is choosing only the funds that made money. (The counter from Picard is that the funds had different owners -- various family members, charities, the Mets and other businesses.)

2. The Wilpons' attorneys assert that a Second Circuit appeals court ruling Tuesday does not apply to their situation. The court ruled that a loser in the Ponzi scheme is defined as someone who invested more money than they withdrew. Experts who spoke with ESPNNewYork.com contend that, intuitively, that means a winner who has to return money is defined as someone who withdrew more money than he invested. The Wilpons continue to challenge that point of view.

"Clawback is the other side of the coin of the Net Investment Method adopted by the Second Circuit case and would suggest that such recovery by the Trustee is available in an appropriate case," said attorney Michael J. Kline of Fox Rothschild LLP's Princeton office.

Former New York governor Mario Cuomo, who has been appointed mediator, was in the courtroom.

Observers say Rakoff was particularly aggressive in questioning the Picard team about why the Wilpons did not withdraw their money if they thought it was a Ponzi scheme. On the flip side, the judge was aggressive questioning the Wilpons' attorneys about the family's alleged inquiry into Ponzi scheme insurance.

Rakoff allowed Picard to seek more discovery in the case.

"At this time, we have no further comment beyond restating our confidence in the Trustee's position and claims in this matter," said Amanda Remus, a spokeswoman for Picard.