- Fred and Jeff Wilpon said late last month that they would sell 20-25% of the team to guard against any potential Madoff settlement. Since then, settlement talks have broken down, leading to the unsealing of the lawsuit last week.
- Picard is seeking $300MM in fictitious profits from Wilpon and his business partners. In addition, Picard seeks an unspecificied amount beyond that (the New York Times reports it "could reach beyond $1 billion") alleging that Wilpon should have known or suspected Madoff's scheme.
- The standard by which Picard arrived at the $300MM is pretty common in these cases- fictitious profits are distributed to those who lost money in Ponzi schemes, scams where new backers are consistently recruited to pay off old investors. For the Wilpons to incur losses above $300MM, Picard's standard will be to prove that a "reasonable man" would have suspected something was amiss regarding Madoff's scheme, and alleges numerous instances of the Fred Wilpon and his partner/brother-in-law Saul Katz receiving warnings from both business partners and Katz's own son.
- It isn't clear how Wilpon would raise anything approaching even the initial $300MM from a minority sale of the Mets. Forbes valued the team at $845MM in April 2010, but Wilpon has borrowed heavily against the team. Forbes reported this week that the combined book value of the Mets and Citi Field, including debt, is negative $225MM, though Adam Rubin of ESPN New York has cast doubt on that figure. That was before the Mets were named specifically in Picard's suit, giving the team even more potential liability.
- Even if someone would pay a premium to own the Mets outright, it is far less clear that someone will pay that same premium for a minority stake and no authority. In other words, a 25 percent stake in the Mets is worth $211.25MM as per April 2010, absent any of the debt or other mitigating factors, and assuming that a 25 percent stake (minority) is actually worth one quarter of 100 percent stake (majority). (It isn't.) Obviously, with all the mitigating factors, 25 percent of the Mets isn't worth close to $211.25MM - which is, itself, far less than the $300MM Picard is likeliest to recover.
- SNY is enormously profitable, and would earn a decent amount in a straight sale. However, Wilpon and his partners have borrowed against SNY as well, diluting the value. And far more ominously, the New York Post reported this week that any proceeds from a sale of SNY would be distributed to those lenders. In other words, when Jeff Wilpon described SNY as wholly separate from any sale of the Mets last Friday, he may not have been making a choice.
- At the end of the day, no one knows what the maximum amount of money Fred Wilpon and his partners can raise without selling a majority stake in the New York Mets. But there is a number, X, and as long as Picard's settlement would be higher than X, Wilpon will face the choice between fighting in court and losing his team.
- It may well be that there is a certain amount of money Wilpon needs to raise to avoid bankruptcy, even including a full sale of the team. If we call that Y, and Picard's settlement would be higher than Y, Wilpon has even greater reason to fight this in court, hoping a judge sees things his way.
- Either way, the longer Wilpon doesn't settle, the likelier it is that one of these two scenarios has come to pass. The results would be disastrous for the New York Mets. With cases such as these often taking a year or more, Mets ownership could be in the midst of this battle next November, just as Albert Pujols and Jose Reyes are scheduled to hit free agency.
Former super-lobbyist Paul Magliocchetti was sentenced today to 27 months in prison, a spokesman for the Justice Department told TPM.
Peter Carr, a spokesman for the U.S. Attorney's office for the Eastern District of Virginia, told TPM that the hearing, which began at 1 p.m., lasted until 5:30 p.m.
Magliocchetti pleaded guilty to making hundreds of thousands of dollars in illegal campaign contributions and making false statements to a federal agency as the founder and president of the lobbying firm PMA Group Inc. Though the crime was described by prosecutors as one of the largest schemes to violate campaign finance law, the politicians who received the campaign donations, including the late Rep. John Murtha and Rep. Pete Visclosky, (D-Ind.), were unaware of the plans, according to the Justice Department.
TPM reported this week that a psychologist hired by Magliocchetti's team said that he would be at a "high risk for suicide" if he was incarcerated.
As the Washington Times reported, Magliocchetti's lawyers brought up his donations dating back to 2005 in arguing for lighter sentencing. Among the donations: over $33,000 to The Girl Scouts; $500 for the Capital Area Food Bank;, $7,500 for an opera festival; and $46,600 to the Congressional Black Caucus Foundation.
Magliocchetti's lawyers argued in court documents filed in December that he should receive leniency because of "Mr. Magliocchetti donated not only his time and talents, but also hundreds of thousands of dollars to numerous charities over the years, many in the Washington, D.C. area and his home state of Pennsylvania."
But Maggliocchetti's lawyers failed to mention that many of the legitimate charitable organizations that received donations were also pet organizations of the congressmen Maggliocchetti lobbied.
According to lists of charitable donations submitted to the court, Magliochetti donations went to many Johnstown, Pennsylvania cultural and charitable organizations. The economic rejuvenation of Johnsown, a small city in western Pennsylvania which happened to be the hometown of Rep. John Murtha (D), was a personal project of the late Representative.
For instance, Magliocchetti donated to the Johnstown symphony, including $12,500 for Opera Festival, and $40,030 for other purposes. The Washington Times article notes that Joyce Murtha, the representative's wife, is a big supporter of the symphony, and that Murtha himself used $14,400 in campaign funds to buy tickets and advertising from the symphony. Magliocchetti also donated $56,050 to the Johnstown Girl Scouts Council and $22,050 to the Johnstown non-profit Women's Help Center.
Late Update: "Paul Magliocchetti spent half of a decade gaming the system. He concocted a massive scheme to secretly funnel money to political campaigns - all so that he could gain wealth and prestige," Assistant Attorney General Lanny A. Breuer of the Justice Department's Criminal Division said in a statement. "As today's sentence makes clear, he must now pay a price."
U.S. Attorney for the Eastern District of Virginia Neil MacBride said in a statement that Magliocchetti "carried out one of the largest federal campaign finance frauds in history."
"He learned that no one - despite wealth and influence - is above the law," MacBride said. "Today's sentence should put anyone on notice that if you seek to buy the influence of elected public officials through skirting the campaign finance laws you'll not merely be exposed publicly but you'll go to prison for a long time."
[Ed. note: this story was updated after publication.]
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CBS <b>News</b>' Lara Logan Sexually Assaulted in Egypt | Fancast <b>News</b>
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