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PAYS THE PRICE

May 30, 2011
May 30, 2011

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May 30, 2011

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PAYS THE PRICE

Love for baseball and loyalty to his friends are two of the defining traits of the game's longest-standing owner. But his long, unquestioning relationship with Bernard Madoff could cost the Mets patriarch his fortune, his reputation—and the team he cherishes

This is an article from the May 30, 2011 issue

Fred Wilpon was in a mood to celebrate when his phone rang at 4:40 p.m. on Dec. 11, 2008. The Mets owner was home early in Locust Valley, N.Y., on this Thursday afternoon and changing out of his suit and tie and into something more festive. In 20 minutes his oldest granddaughter, Kimberly, expected to learn online the result of her application to her first choice of colleges. Wilpon had scheduled a family celebration for that night in her honor at a Japanese restaurant in nearby Manhasset.

Life was extraordinarily rich for Wilpon, who had grown up in a four-family house in the Bensonhurst section of Brooklyn, the son of a funeral home manager. A real estate magnate renowned for his equanimity, loyalty and aficionado's love of baseball, Wilpon was so enriched that a few years earlier, he and his wife, Judy, had decided that they would not keep another dime of their fortune. Not only did they have enough money, but also the trust funds of their children and their children's children were so comfortably swollen that they would donate the rest of their estate in their lifetimes, rather than letting someone else parse it when they were gone.

"Did you hear?"

It was Emily O'Shea, his executive assistant for the past 35 years, on the phone. Her tone suggested bad news to a man accustomed to good news.

In just four months his Mets, coming off a season in which they drew a National League--leading four million fans, would open Citi Field, an $850 million wink to Ebbets Field, the beloved Brooklyn baseball chapel of Wilpon's youth. Earlier that day the club had swung a trade for reliever J.J. Putz, a $6 million setup man, to work in front of new closer Francisco Rodriguez, who had been signed for three years and $37 million just two days earlier. The Mets' payroll was headed to $149 million, a franchise record and the highest in the NL.

Also that same day Wilpon, through his Sterling Equities development company, which he cofounded in 1972 with his brother-in-law Saul Katz and which dealt mostly in commercial real estate, had stashed more money into Bernard L. Madoff Investment Securities LLC (BLMIS), in which at least 21 Wilpon family members and close business associates had held as many as 246 accounts, the first of which Wilpon opened in 1985.

The Sterling investors had $550 million in Madoff accounts. Or so they thought. In one phone call Wilpon learned it was gone. All of it. The Securities and Exchange Commission had just charged Madoff with securities fraud for operating history's largest Ponzi scheme—a business, Wilpon learned later, that Madoff had confessed to his sons, Mark and Andrew, the previous morning as being "all just one big lie."

"I just heard it on the news," O'Shea told Wilpon.

"Emily," Wilpon said softly. "This ... this can't be."

Bernie Madoff wasn't just an investment sage to Wilpon. He also was a trusted friend. They had known each other for almost 35 years, ever since their kids played together on the ballfields of Roslyn, N.Y. They invited one another to family weddings. On Florida vacations they went to the movies together and Madoff showed Wilpon his $2.2 million 55-foot vintage yacht, named Bull. Madoff had helped Fred and Judy celebrate their 50th anniversary two months earlier.

"I just couldn't believe it," Wilpon says. "It felt like a dagger—you know one of those serrated daggers, when you pull it out, you pull your guts out a little bit? I totally trusted this man. And I was so fond of him, and so appreciative for what he was doing, not only for our family, but we had relatives and friends whose lives changed. Many ... who begged us to get into [business with] Bernie.

"I put myself together. I told Judy. About 10 after five [Kimberly] called and she was off-the-charts happy. She got into her school of choice. I took them all to dinner. I didn't say anything to anybody other than Judy. We celebrated her getting in. And the next day, of course, the s--- hit the fan."

For Wilpon, there is a life before that phone call and a life after it. His wealth, his stellar reputation and his 31-year ownership of the Mets—he is the longest-tenured owner in baseball—are all under siege because of his relationship with Madoff. Not long after the dagger struck, Wilpon and his son Jeff, the chief operating officer of the Mets, held a news conference to assure the public that Madoff's scheme would not impact the operations of the club. "At that moment," Wilpon says, "that was absolutely true—because we didn't dream that the trustee would sue us for a billion dollars."

One billion dollars. Another dagger. Two years after Madoff's arrest, Irving Picard, the trustee for the liquidation of Madoff's investments, sued the Wilpons and Katzes for $1 billion—the $295 million they made in fictitious profits, plus approximately $700 million of principal they had invested with Madoff in the six years before his arrest. Picard has filed hundreds of such "clawback" lawsuits to recover money to distribute to net losers from Madoff's scheme. Picard contends Wilpon and his partners must pay $1 billion under the theory that, according to the suit Picard filed last December, they "should have known" Madoff was a fraud and essentially enabled his scheme by continuing to invest with him. Picard bases that claim on the bankruptcy-law tenet of good faith. In a statement last week Picard said that "a defendant did not act in good faith if what it knew about [Madoff's investments] gave it a reason to inquire further, but instead it turned a blind eye and continued to take money from an enterprise it should have known might be a fraud."

"You have to feel for Fred going through this," says one of his friends, "because in the best-case scenario for him, he's admitting guilt in public to a massive case of stupidity."

Asked if he understood that characterization, Wilpon responded, "I do. Someone might have said, Well, you should have had more stock portfolios, whatever... . I don't know s--- from shinola. I never bought a stock in my life. That's not what we're good at. You can say, You should have had the money in U.S. Trust or Citibank or whatever. In retrospect, you can say yeah. And call that stupid or lack of judgment."

Until now Wilpon largely has confined his explanations and responses to Madoff and Picard to court filings and press releases in which the Sterling partners disavow any knowledge of a fraud. "There were no red flags and they received no warnings," the partners reiterated in a statement last Thursday, responding to a claim by Picard that they shopped for, but did not purchase, fraud insurance in 2001.

In an interview with SPORTS ILLUSTRATED, the 74-year-old Wilpon offered his most detailed and personal accounts of the Madoff scandal and the Picard lawsuit, which he acknowledged could cost him his ownership of the Mets if he and his partners are forced to pay the $1 billion.

"We were shocked," Wilpon says of Picard's suit. "Because there are two pieces of this situation. What he is saying is, 'In our definition of winners and losers, you were a winner. Therefore, we're going to claw back those winnings.' That's a legitimate legal issue. Then when you say, 'We want your principal. We want the money you made with real estate, the money you made with the Mets.' ... That's crazy."

Former New York governor Mario Cuomo is serving as mediator between Picard and Wilpon, who says he is willing to discuss a settlement regarding the fictitious profits, which his lawyers believe by statute should be narrowed to six years, representing about $160 million. "Governor Cuomo," Wilpon said, "has not been able to at this stage convince [Picard] that the 700 is not going to be obtainable.

"I think the club became in jeopardy when he filed [for] this billion dollars. That's when I decided to sell part of the club and maintain control in our operations and share the partnership with somebody."

In January, Wilpon announced that he was looking for an investor to buy a minority share of the team for $200 million. (A buyer who puts up that much cash and assumes some of the team's debt load could own as much as 49% of the franchise.) Thirty-six candidates responded. Wilpon says he recently narrowed the list to four and could have an agreement within three weeks. While he did not name the finalists, one of the leading candidates has not been mentioned in press reports, according to a source familiar with the process.

Wilpon says the $200 million cash infusion already has been earmarked: $25 million to pay off an emergency loan that Major League Baseball extended last November, $75 million to pay down $427 million in debt the Mets are carrying ($375 million to banks and another $52 million to MLB, which extends low-interest loans of that size as a matter of course to all clubs) and $100 million toward operating costs. Wilpon says the Mets "are bleeding cash" and acknowledges that they stand to lose as much as $70 million this year.

Though the Mets will have about $64 million in salaries coming off the books after this season (from a $142 million total), they will not put much, if any, of that money back into the major league payroll. The Mets essentially have forfeited the resource advantages of playing in the country's biggest market with a new ballpark and their own regional television network, SNY, which they launched in 2006. Attendance is down 10% from last year, when they were off 1.5 million paid customers from 2008, their final year at Shea Stadium. Coming off two straight losing seasons, and one postseason appearance in the past decade, they were 22--24 at week's end, in fourth place. They are so poorly run that they are paying $22 million to players who no longer play for them.

The Mets brand has been tarnished by a series of scandals and calamities on the field and off: the 2007 guilty plea of former clubhouse attendant Kirk Radomski to distributing steroids, the 2005 guilty plea of groundskeeper Dominic Valila to participating in an organized crime gambling operation, the arrest this month of longtime equipment manager Charlie Samuels for allegedly stealing equipment and uniforms, the arrest last year of closer Francisco Rodriguez for assaulting the father of his girlfriend outside the Mets' clubhouse, and Madoff ... all of it since Wilpon bought out his former partner, Nelson Doubleday, for $131 million in 2002 to become the sole owner.

The Mets' troubles have grown more acute since outfielder Carlos Beltran looked at the final strike of Game 7 of the 2006 National League Championship Series with the bases loaded and St. Louis clinging to a 3--1 lead. They blew a seven-game lead with 17 games to go in 2007 and a 3½-game lead with the same number of games left in '08, then stayed out of contention entirely with two straight losing seasons. A slew of big-money players broke down (Beltran, Putz, Rodriguez, Carlos Delgado, Johan Santana, Jason Bay, Billy Wagner) or simply weren't very good (Oliver Perez, Luis Castillo).

Wilpon's management team contributed to the chaos too. The Mets have let go of nine managers and general managers in the past 10 years, none of whom have been hired in the same capacity by another club. One of the G.M.'s, Omar Minaya, fired manager Willie Randolph after a 2008 game in Anaheim at 3:12 a.m. Eastern time. One year later Minaya fired VP of player development Tony Bernazard—who once ripped off his shirt in a clubhouse challenge to minor leaguers—and turned a live televised news conference into an ugly exchange with a reporter that paved the way to his own ouster. A year later Minaya and manager Jerry Manuel, Randolph's replacement, were fired.

Over the previous four seasons Wilpon has sunk more money into payroll ($537 million) than any other team except the Yankees and the Red Sox—with no postseason appearances and a 326--322 record to show for it. "Put all the money aside," Wilpon says of the demise of the Mets. "It hurts. I haven't gone public with my feelings about this, but it hurts. In retrospect, yeah, I made a lot of poor judgments. [Madoff] is by far the biggest regret. By far. The ramifications of some of the others are minimum compared to the regret of trusting a friend with an enormous amount of earned money."

You know, I'm in the investment business."

With that simple line Bernie Madoff opened a door for Fred Wilpon to enter his very exclusive financial world. Wilpon laughed to himself about the humble nature of Madoff's opening. Bernie Madoff in the investment business? It was like Springsteen introducing himself as being in the music business. This was the 1980s. Of course Wilpon knew all about Madoff, and not just because he had seen him around Roslyn for years as their sons enjoyed sports and friendships together. He, in fact, had first met Madoff many years earlier when high school buddies Mark Madoff and Jeff Wilpon, who was a year and a half older than Mark, introduced Bernie to Fred.

"Bernie Madoff," Wilpon says, "was a star. I knew who he was, no question."

"You know," Madoff said to Wilpon, "I'd like to diversify. Maybe you'd like to invest with me, my investment fund, and I'd like to invest in some of the things you do."

"Yes, Bernie," Wilpon said. "Let's consider that."

Through his ownership of the Mets, Wilpon was becoming a star in his own right, which is exactly why he had entered the high-profile world of major league baseball in the first place. Wilpon had been a standout pitcher on the Brooklyn sandlots and at Lafayette High—even better than a teammate who generally played first base, Sandy Koufax, the future Hall of Famer whom Wilpon has long considered his best friend and second brother.

Baseball, the Dodgers and Ebbets Field were touchstones of Wilpon's early life. He remembers sitting on his father's lap as a youngster at Ebbets, making the price of one ticket accommodate two. (When Wilpon built Citi Field, he personally designed the rotunda behind home plate to evoke the Dodgers' old home and to honor Jackie Robinson. His inspiration for the soaring archways, he says, were "memories of holding my father's hand walking into Ebbets Field.") In a 1953 visit to the park Wilpon, accompanied by his buddy Koufax, met his hero, Dodgers first baseman Gil Hodges, the ex-Marine renowned for his huge hands. Wilpon asked Koufax to match his hand against Hodges's, and was floored when he saw that Koufax's fingers were "one full digit longer" than those of the major leaguer.

Wilpon graduated from the University of Michigan in 1958—his cellphone springs to life with the school's fight song—and by 1972 established Sterling Equities with Katz, the son of a carpenter who had married Wilpon's sister, Iris. They dealt mostly in smaller commercial buildings and residential real estate, with great success. But Wilpon craved the cachet of the Manhattan office building market. "We really were not able at that time to get into the so-called club of New York real estate," Wilpon says.

That "club" was old-money, generational money. Wilpon needed an entrée into that world. In 1979 he brought Jeff, then a high school catcher, to Shea Stadium to work out for Mets coach Joe Pignatano, a fellow Brooklynite. There, he heard the Mets were being put up for sale. "A lightbulb went off," Wilpon says. "My idea was partly because of my passion, partly for business reasons and a lot for what it could do for us in terms of giving us an identity that we didn't have. They always call me the dreamer. I'm not the guy in the company that does the accounting. I'm sort of the dreamer."

Wilpon and Katz acquired the Mets with a $21.1 million bid in 1980: They put up $650,000 each, with publishing giant Doubleday & Co. financing the rest and Wilpon assuming the title of president and chief executive officer. The gambit worked. The status of owning the Mets was very good for Wilpon's real estate business. The Brooklyn kid joined the club. "It opened up enormous avenues of opportunity for us," he says. "Ask any of my partners, and they will tell you they didn't dream how much that would be. We eventually got the ability to develop some office buildings. It allowed me to dream more."

Wilpon became enough of a player to be welcomed in Madoff's league. In the mid-'80s, Madoff invested money in Sterling Equities—always in the name of his wife, Ruth. And in October 1985, Wilpon, Katz and Michael Katz, Saul's brother, opened their first BLMIS accounts.

In November 1986, just after the Mets won their first World Series in 17 seasons, Wilpon and Nelson Doubleday purchased the Mets from the Doubleday company for $80.8 million. One month later seven more Sterling partners and family members opened BLMIS accounts. Year after year, more accounts opened in the name of Sterling partners and their relations—wives, brothers, sisters, children, grandchildren—and more money flowed in. Over the years Sterling partners opened 483 accounts, including those of friends, all of them marked by Madoff with a three-digit number preceded by the special designation KW—for Katz/Wilpon.

Meanwhile, Wilpon began to see Madoff more often socially. Madoff carried himself with an unassuming bearing, more kindly patrician than Wall Street hustler. He wore dark, crisp suits and owned more than 250 pairs of expensive designer shoes made in Italy, France, Belgium and England. It was the perfect look to engender trust. "He was extremely successful, but he was very low-key and never pushed anything," Wilpon says. "He never said, 'Give me more of your money.' Never. He apparently, in retrospect, used that persona as a marketing tool, to attract people. Because that did attract people."

Like Madoff himself, the returns his investments produced didn't call attention to themselves. They were steady, not spectacular. Madoff told his clients he had developed a proprietary system of exquisitely timed puts and calls—a way to bet on the movements of security prices—that did away with wild swings.

The Madoff system provided a steady return of 10% to 12% to the Sterling partners. That consistency is at the heart of Picard's suit. In his complaint, the trustee argued that the Sterling partners "should have known Madoff's fund was too good to be true because it consistently yielded positive gains coupled with ultra low volatility."

Asked about the too-good-too-be-true theory, Wilpon says, "Not by [Madoff's] formula, if you believed his formula of what he did with puts and calls. Markets going this way and markets going that way didn't affect the basket of stocks he was allegedly buying.

"We had no feeling that that was unusual. There were times when his returns were a little higher and times they were a little lower. I think generally he used to say he would double [the return on] Treasuries."

In 1992, Wilpon says, he was sitting in the office of Ike Sorkin, an attorney for two Florida accountants who worked with Madoff. Wilpon watched Sorkin write a $400 million check to settle a lawsuit by the SEC charging the accountants with selling unregistered securities. The SEC determined that the investors' money was accounted for, blamed the accountants and did not accuse Madoff of wrongdoing. "The SEC said he's absolutely clean as a whistle," Wilpon says. "They admonished the guys down there in Florida. Nothing with Bernie."

Though Madoff was not much of a baseball fan, he became a well-known figure around the Mets' offices. He held season tickets near Wilpon's box seats at Shea, traveled to Japan with the club in 2000, was a guest of Wilpon's in his suite for two playoff games and owned a satin Mets warmup jacket with his name sewn on the back—a jacket that fetched $14,500 in November 2009 when U.S. marshals auctioned off his belongings. Mostly, he was known around the Mets' offices as Bernie, the man with the highly reliable investment vehicle, albeit one for heavy investors.

"I heard his name on a regular basis, met him once or twice on Opening Days, Subway Series parties," says Steve Phillips, the Mets' general manager from 1997 to 2003. "Not once did my ears perk up or the hair on my neck. Fred would talk about Bernie's résumé, as a chairman of the [NASDAQ] stock exchange. Not one time did I get the sense that something was a little shady. That would go counter to everything the way Fred does business."

Phillips says Wilpon once suggested Madoff's fund to him "once you get some money saved up," but, as Phillips says, "I never got it." Another former team employee says he also was given an opening to join Madoff but lacked the $100,000 minimum investment.

"They would say, 'This is what they averaged over the past 10 to 12 years,' " the employee says. "I said to my wife, 'It sounds great.' I laugh about it now. But back then, here's Fred Wilpon, a tremendously wealthy and successful businessman. If he vetted it, I felt comfortable with it. I feel bad for him. I do think Fred is a genuinely good guy."

The Sterling partners were so trusting of Madoff that they ran much of the Mets' operational money through BLMIS accounts; about 80% of their deposits were made in the off-season and 75% of the withdrawals in-season. Every winter, Wilpon says, the Mets would collect about $45 million in ticket sales. "Instead of putting [the money] in J.P. Morgan or Citi or another bank," he says, "[we] put it to Bernie. And as we needed money throughout the year to pay off expenses, we'd take the money out. But the money, instead of earning two percent, is earning eight percent, whatever, 10 percent. We felt totally secure with that."

A high-level front office meeting in December 1999 also showed the degree of confidence the Mets had in Madoff. The club wanted to be rid of outfielder Bobby Bonilla, a malcontent who had hit .160 the previous season in a second unhappy tour of duty with the franchise. To release Bonilla, however, would cost the Mets the $5.9 million he was owed for the 2000 season. The Mets came up with a buyout plan: Beginning on July 1, 2011, they would pay Bonilla $1,193,248.20 per year for 25 years, or $29.8 million. The payment was based on the return Bonilla would've received had he invested the $5.9 million at an interest rate of 8% (which was just below the 8.5% prime rate at the time).

Why would the Mets make such a deal? The Bonilla money would be invested with Madoff, from whom the Mets expected the usual 10 to 12% return, or two to four percentage points above the rate they guaranteed Bonilla. "We were going to make money on Bobby Bo's $30 million," says one official who was at the meeting. "I remember the chuckling in the room."

By deferring the money to Bonilla, the Mets freed cash to fortify their roster for the 2000 season. On Dec. 23, 1999, they traded for pitcher Mike Hampton and outfielder Derek Bell in a deal that added $8.1 million to the payroll. Eleven days later they officially released Bonilla. The 2000 Mets would win the NL pennant. The Madoff fund made the roster moves possible.

The Mets, Wilpon says, used Madoff investments to fund deferred payments "several times," making them to pitchers Bret Saberhagen and Tom Glavine, among others. "You can fault us for that," he says. "The judgment, in retrospect, was not good. We trusted a man who turned out not to be trustworthy."

Wilpon says that his trust in Madoff was so complete that he asked only cursory questions of his friend when he and Katz would meet him, once a year, for a casual lunch. "I don't remember talking business with Bernie any other time," Wilpon says.

At one of those annual meetings—around 2001 or '02—Katz asked Madoff, then in his mid-60s, "Bernie, you're getting on. What do you do when you get tired of doing this?"

Replied Madoff, "I'll send you your money back, and you'll put it in U.S. Trust."

"I'll never forget," Wilpon says, "going down the elevator. Saul looked at me and I looked at him, and he said, 'We've got to have an alternative.'"

In June 2002 the Wilpon-Katz group partnered with financier Peter Stamos to start their own hedge fund, Sterling Stamos. ("That," Wilpon says, "was the diversification for our liquidity.") Over the next six years the Sterling partners split their investments between Madoff and Stamos. At the time of Madoff's arrest, they held $550 million with Madoff and $400 million with Stamos.

Two months after starting Sterling Stamos, Wilpon bought out Doubleday's half of the Mets for $131 million, making him the sole owner. The relationship between Wilpon and Doubleday, who lived three miles apart, had grown so toxic that they rarely spoke—except when Doubleday wanted to complain about Jeff Wilpon, who had risen to the title of Mets COO. Says Fred, "There's no question there were not good vibes between us. Today I see Nelson, and it's not a problem. I don't have animosity toward him today. He hated Jeff. He didn't like Saul. He didn't like anybody in my family. He liked Judy. Everybody likes Judy."

That summer, as the deal moved toward completion, Wilpon reached out to four or five "extremely close friends" to offer them a piece of the team. Whatever they invested, Wilpon told them, he would double or triple, making sure the Sterling partners were the senior officers. Among those in his inner circle given a chance to buy into the Mets were investment banking magnate Herbert Allen, former New York Giants owner Bob Tisch and investment wizard Bernie Madoff. All turned down the offer for various reasons.

"Bernie didn't want to be in the public eye," Wilpon says, "which I can now understand more."

Fred Wilpon woke up $550 million poorer on the morning of Dec. 12, 2008. It was the first day of his new life—this messy life after Madoff. He knew just where he should begin. He had to talk to his father.

Nat Wilpon was 14 years old when he started working for Sherman Funeral Home on Coney Island Avenue in Bensonhurst. He was never employed anywhere else, working his way up to manager. The Wilpons lived in a brick four-family building on 62nd Street and 23rd Avenue, where the neighbors served as trusted extensions of family. On stifling summer evenings, Nat would say to Fred, "Let's go get some air," and they would drive 10 minutes to Coney Island to catch a salt-seasoned breeze coming off the Atlantic and talk about Gil, Jackie and the Dodgers. Now, with the heat of the Madoff scandal upon him, Fred needed some air. And he needed to talk to his father.

It didn't matter that Nat Wilpon had been dead for 43 years.

In the breast pocket of his suit jacket Wilpon carries his wallet, where he keeps a black shiva ribbon. He has carried it ever since his father's funeral. When he got dressed that morning, Wilpon reached for his wallet and pulled out the ribbon. "And I said, 'I'm going to have this conversation with my dad,' " Wilpon says. "I understand that I can't, but in my mind I can.

"And what he said was, 'Don't get angry. Be very disappointed in Bernie. Hurt? You can feel that personally. But don't get angry. Because if you get angry, you will eat up your own insides.'

"And he was right. So I am disappointed, chagrined, but I'm not angry. If I saw Bernie, would I want to kick him or punch him? No, no. I've heard some people say, 'That son of a bitch, I'd like to kill him.' That's not how I feel. I've tried to temper that because I've got to be focused on getting where we need to and putting this behind us."

When he was old enough to get a driver's license, Fred went to work at Sherman Funeral Home. He drove a funeral car, a long, black Cadillac limousine. The teenaged Wilpon would point the Cadillac down Coney Island Avenue with grieving family members of the deceased in the back. The kid kept quiet, but he listened and observed. At the end of the day he would scribble notes into a notebook. This went on for the eight years Wilpon drove the funeral car.

One day, after about three or four years of driving and notetaking, a rabbi he knew well and regarded highly, a man who was also a lawyer and a Ph.D., asked him, "What are those notes for? Can I see them?"

"Sure," Wilpon told him. "They are notes about human behavior, about people under great stress. I'm trying to learn something from their behavior—from the people who talk too much in the car, to the people who don't say anything, to the people who got nasty, even violent, with each other... . Usually over money—the root of all evil."

Now, more than half a century later, Wilpon finds himself applying the notes and lessons he gleaned from studying people under great stress in a Cadillac driving down Coney Island Avenue.

The first thing Wilpon decided he needed to do after Madoff's arrest was go to his banks "to pay back every penny" of loans Sterling had taken out with Madoff accounts as collateral. Katz met with the banks to arrange restructuring and payment plans. With the help of his other assets—the Sterling Stamos accounts, real estate ventures, SNY—Wilpon, he says, "paid back everything other than about 180 [million dollars], which is due to be paid back in the next two years."

Wilpon seemed on his way to recovering from Madoff, but then Picard hit him with the $1 billion lawsuit. There were thousands of people who invested money with Madoff, handing over a collective $17.3 billion, according to Picard. Wilpon has become the most prominent, recognizable face of the Madoff clients—all because he is the owner of the New York Mets. The platform that comes with the position, which he had used to help launch his success in Manhattan real estate, now works against him, exposing him to greater scrutiny.

Wilpon says Sterling can afford to pay back all or most of its Madoff profits, but whether the suit breaks him or not depends on Picard's claim that he must also repay the $700 million of principal, even if he didn't know Madoff was a fraud—a claim that has been met with skepticism by the Wall Street Journal (which said Picard "seems most interested in collecting fortunes from public figures by humiliating them into a settlement, before his claims are ever tested in court") and Congressman Peter King (R-N.Y.) ("I think Picard has abused his power," he told WFAN, the Mets' flagship radio station).

Picard's tactics might be questioned, but in April he said in court papers that his clawback lawsuits—many have been settled, none decided in court—have reclaimed $7.6 billion of the principal invested with Madoff. Much of that came from a $7.2 billion settlement in December with the estate of investor Jeffry Picower, the largest beneficiary of the Madoff scheme and someone, like Wilpon, whom Picard argued should have suspected that his profits were based on a fraud. The estate of Picower, who died in 2009, admitted no wrongdoing in the settlement.

Wilpon's profits were nowhere near as dramatic as Picower's—one reason he says there was no reason for him to be suspicious of Madoff. "We trusted the man, it was steady, it was supposedly a safe investment," Wilpon says. "And so we made a mistake. Clearly. And we're now fighting that battle with the trustee because he knows that we didn't know [about the fraud], and he knows he's stretching the point by saying 700 million."

Fred Wilpon sat in a richly appointed wood-paneled waiting room one day last week on the ground level of Citi Field. It is a private lobby for VIPs headed to their suites. Wilpon chose the decor himself, selecting an Americana theme to underscore how deeply rooted baseball is in this country's history. Among the appointments are a framed 13-star American flag, framed handmade hook rugs that are more than 100 years old and substantial leather chairs.

Wilpon met a reporter here because he has no office at Citi Field—by his own choosing. Jeff, he said, has an office because he runs the team's operations. Major club decisions run through Fred, who otherwise enjoys scouring the daily scouting reports that come in from minor league affiliates. He is passionate about pitching, in particular. If the Mets advance a pitching prospect in the low minors, for instance, Wilpon will not just know about it, but also what types of pitches are working well for the prospect.

The danger of losing the Mets weighs heavily. Says Phillips, "I know how important the team is to the Wilpon family. I suspect they will do everything they can to keep the team. I hope for them they can."

"I cannot imagine [the Wilpons] without the club," says one former Mets executive. "It's like their identity. You'd go to dinner around town, and it wasn't 'Fred Wilpon, real estate developer.' It was 'Fred Wilpon, owner of the New York Mets.'"

The list of partners of Sterling Equities, which owns the Mets and has purchased or developed more than 32 million square feet of commercial and retail space and 57,800 residential units, has a decided familial feel for a company of its size. Seven of the 10 partners are named Wilpon or Katz, with the other three having served for decades. Relationships are very important to Wilpon, who has been married for 52 years and who has had the same best friend for 60 years. He prides himself on never having had trouble with the unions at his buildings. He ordered all customer service employees at Citi Field to wear name tags in large letters, in part so that he can call them by name when he offers a hello or a thank you. He has kept a close friendship with baseball commissioner Bud Selig, who has offered Wilpon the financial and moral support he has withheld from another owner in distress, Frank McCourt of the Dodgers. (Selig would not compare the two cases, though a high-ranking MLB official said Selig sees a "huge difference" between the two because Wilpon came to MLB to find an equity partner to address a debt problem while McCourt addressed his debt with more debt.)

"Fred is sincere and loves the sport in a big way," Selig says. "Some of the best times we have are when [White Sox owner] Jerry Reinsdorf, Fred Wilpon and I play baseball trivia from the '40s and '50s. They're good, but I usually win. I do know him well, and he's very loyal. He's very sincere and doesn't like controversy."

"Fred has these sort of connections where he's all in on those relationships," says Phillips, whom Wilpon fired as G.M. in 2003. "Those are the kind of relationships Ponzi schemes prey upon: blind loyalty. Because of his loyalties, he probably kept me around longer, hoping things would turn around, than others would have. People he likes, he likes, and he is not easily changed."

Bernie Madoff was a longtime friend of Fred Wilpon, which means he earned Fred Wilpon's loyalty to a fault. In a jailhouse interview with The New York Times in February, Madoff exonerated Wilpon, saying he knew nothing about the fraud. "It's been proven he's a man who can't be trusted, but he told the truth there," Wilpon says.

Picard filed his clawback lawsuit against the Sterling partners on Dec. 7, 2010. (It was unsealed two months later.) Four days after the filings, and on the second anniversary of Madoff's arrest, Mark Madoff sent an e-mail from his SoHo loft to his wife, Stephanie, who was on vacation with their four-year-old daughter at Disney World. Mark told her in the message that he loved her and that someone should check on their two-year-old son, who was with Mark. Stephanie sent her stepfather to the apartment. Mark Madoff was found dead in the living room of his apartment, hanging from a black dog leash in the living room. His toddler son was sleeping nearby.

It was the schoolboy friendship of Mark and Jeff that brought Bernie and Fred together in the first place. In the VIP lounge at Citi Field, Wilpon considered that beginning, and the loss of Mark, in near darkness; he did not know how to turn on the overhead lights of the large, windowless room. The only light came from the subdued glow of three bashful table lamps. He had lost $550 million to a friend, he is fighting for his family's name and his baseball team, and is being sued for a billion dollars, but Wilpon broke down emotionally just once in the room: when he was asked how difficult it was to hear the news about Mark's suicide.

"Oh, my God," he said in a whisper. "I loved that kid... ."

Wilpon sat on the edge of a light-brown leather couch, illuminated only by a gentle swath of golden light. He rolled his head back and looked toward the ceiling. Tears welled in his eyes. He tried to speak, but something far short of an audible word came out. Then he bowed his head and wept in silence for 40 seconds.

Finally he said softly, "I'm sorry."

Mark Madoff is gone. Bernie Madoff, 73, pleaded guilty on March 12, 2009, to 11 felonies. He was sentenced to 150 years in prison and is incarcerated at the federal correctional institution in Butner, N.C.

Fred Wilpon never did speak to his former friend after everything changed on Dec. 11, 2008. He never tried. He has thought about what he might ask Madoff if ever such an opportunity came to pass.

"It's a simple question," he says. And he lowered his voice in the dim light. "Why? Why?"

MADOFF WASN'T JUST AN INVESTMENT SAGE TO WILPON. HE ALSO WAS A TRUSTED FRIEND.
"IN THE BEST-CASE SCENARIO," SAYS ONE FRIEND, WILPON IS GUILTY OF "A MASSIVE CASE OF STUPIDITY."
"I'M NOT THE GUY IN THE COMPANY THAT DOES THE ACCOUNTING," WILPON SAYS. "I'M SORT OF THE DREAMER."
LIKE MADOFF HIMSELF, THE RETURNS HE PRODUCED DIDN'T CALL ATTENTION TO THEMSELVES.
"SOME PEOPLE SAY, 'THAT SON OF A BITCH, I'D LIKE TO KILL HIM,' " WILPON SAYS. "THAT'S NOT HOW I FEEL."

WILPON'S WORLD

1. With Jose Reyes, 2004

2. At Shea on the last day of the '07 season

3. With Jeff in spring training, 2011

4. With Rudy Giuliani, '00

5. With G.M. Sandy Alderson and manager Terry Collins last November

6. At Shea, 1980

7. Celebrating NLDS win, '99

8. With Keith Hernandez, 1997

9. At Shea, 2007

10. With Madoff, 1995

11. With Ed Koch and friends, '82.

12. Spring training, 2010

13. With Minaya, '08

14. With Mike Piazza, 2002

15. With Rachel Robinson, 1987

16. With Koufax, 2000

17. With David Wright, '07

18. With Selig, 2004

19. Citi Field groundbreaking, '06

20. Spring training, 2011

PHOTOPhotograph by MICHAEL O'NEILLPHOTO1. JEFF ZELEVANSKY/ICON SMIPHOTO2. ANTHONY J. CAUSI/ICON SMIPHOTO3. MARC SEROTA/GETTY IMAGESPHOTO4. ANDREW SAVULICH/NY DAILY NEWS ARCHIVE/GETTY IMAGESPHOTO5. CHRIS MCGRATH/GETTY IMAGESPHOTO6. WALTER IOOSS JR.PHOTO7. MARK LENNIHAN/APPHOTO8. KEITH TORRIE/NY DAILY NEWS ARCHIVE/GETTY IMAGESPHOTO9. BILL TURNBULL/NY DAILY NEWS ARCHIVE/GETTY IMAGESPHOTO10. GI/BM/GETTY IMAGESPHOTO11. RONALD C. MODRAPHOTO12. NOAH K. MURRAY/THE STAR-LEDGER/US PRESSWIREPHOTO13. JAMES A. FINLEY/APPHOTO14. KEITH TORRIE/NY DAILY NEWS ARCHIVE/GETTY IMAGESPHOTO15. RONALD C. MODRA/SPORTS IMAGERY/GETTY IMAGESPHOTO16. KEITH TORRIE/NY DAILY NEWS ARCHIVE/GETTY IMAGESPHOTO17. RICHARD DREW/APPHOTO18. SUSANA BATES/NY DAILY NEWS/GETTY IMAGESPHOTO19. ED BETZ/APPHOTO20. JEFF ROBERSON/APFOUR PHOTOSPhotographs by MICHAEL O'NEILL