Header graphic for print
White Collar Defense & Compliance Developments in Criminal Law, Federal Case Law and Statutory Developments

A New Order by Judge Rakoff Will Complicate Prospects for the Wilpons/Mets in Next Week’s Jury Trial – Installment 71

Posted in Bernard Madoff

Michael J. Kline writes:

Yesterday, Judge Jed S. Rakoff issued a new Order (the “March 14 Order”) without an accompanying Opinion, almost on the eve of the trial by jury between the plaintiff, Madoff Trustee Irving Picard, and the numerous defendants, the Wilpon-Katz-Mets individual, business, family trust and charitable interests (the “Wilpons”). The March 14 Order is certain to create consternation in the Wilpons’ spring training camp.

The March 14 Order states “the burden of proving, by a preponderance of the evidence, that the defendants [the Wilpons] received the aforementioned transfers in good faith rests on the defendants.” As a result Judge Rakoff has now placed on the Wilpons the burden of proving the absence of willful blindness rather than placing the burden of proving the presence of willful blindness on the Trustee. The March 14 Order also states that, in issuing the Order, “the Court adheres to its prior determination.” However, there was no reference in the Order as to when and where the “prior determination” was made by Judge Rakoff.

This blog series reported previously on the Order issued by Judge Rakoff on March 5, 2012 (the “March 5 Order” and, collectively with the March 14 Order, the “Orders”). In his March 5 Order, Judge Rakoff denied the Wilpons’ motion for summary judgment, while expressing that "the Court remains skeptical that the Trustee can ultimately rebut the defendants’ showing of good faith, let alone impute bad faith to all the defendants.” The language of the March 5 Order is somewhat perplexing in light of the March 14 Order, as it would appear to require the Trustee to prove bad faith by the Wilpons at least with respect to actions of defendants on an individual basis.

In each of the Orders, Judge Rakoff promised to issue an explanatory Opinion later. More complete clarity may have been accomplished by Judge Rakoff through issuance of Opinions contemporaneously with the Orders on these major trial matters. The preparation of such Opinions may have been forestalled at least in part by the “firmly scheduled” trial date of March 19, 2012 that Judge Rakoff imposed last fall on the litigants. The trial date may have been ambitious in light of the many complex issues that required pre-trial resolution.

[To be continued in Installment 72]

(Michael J. Kline, Esq., the author of this entry and a co-author of this blog, is a partner with Fox Rothschild LLP, based in our Princeton, NJ office, and is a past Chair of the firm’s Corporate Department. He concentrates his practice in the areas of corporate, securities, and health law, and frequently writes and speaks on topics such as corporate compliance, governance and business and nonprofit law and ethics.)