Michael Kline writes:
On May 31, 2012, Federal District Judge Jed S. Rakoff issued his much-anticipated and delayed Order approving the settlement agreement (the “Settlement Agreement”) between Madoff Trustee Irving Picard and the numerous defendants, constituting the Wilpon-Katz-Mets individual, business, family trust and charitable interests (collectively, the “Wilpons”). However, would the great Yogi Berra, who is famous for saying, “It ain’t over till it’s over,” be likely to agree that it is over? There appear to be a few loose strands still present, within the Wilpons’ case itself and generally for the many unresolved Madoff/Picard matters.
This blog series has been chronicling the progress of the Picard/Wilpons battle in Federal Court through approval of the Settlement Agreement one year and five days after it began. In particular, some of the loose strands that exist or could still surface include the following:
1. Installment 74 of this blog series pointed out that Judge Rakoff committed that he would issue an explanatory Opinion “later” with respect to his March 5 and 12, 2012 Orders that lacked accompanying Opinions when rendered. To date the Judge has not yet published such Opinions. Because such Orders may have played a crucial or even decisive role in leading to the Settlement Agreement between the litigants, such Opinions would be helpful in understanding the legal foundations for Judge Rakoff’s Orders and the Settlement Agreement. As Judge Rakoff is a respected and thoughtful jurist, his Opinions could assist in guiding other Madoff cases.
2. Prior settlements by the Trustee in other Madoff cases, such as the Picower settlement and the Hadassah settlement, have been appealed by other claimants without success. It is possible that such a challenge could occur in the Wilpons’ matter as well. Such challenges could be assisted by the Opinions referred to in item 1 above.
3. The U.S. Supreme Court could agree to hear a case during the appeal period in the Wilpons’ matter, in which the Supreme Court could consider the method of calculating “winners” and “losers” that was adopted by Judge Rakoff and others in various cases in the Madoff bankruptcy proceedings. (On May 26, 2012, Bloomberg.com reported that the Securities and Exchange Commission opposed the hearing of such a case by the Supreme Court.)
4. Installments 75 and 76 raised questions as to the inclusion of the private charitable foundations of the Wilpons in the global Settlement Agreement. It remains to be seen how the inclusion of such private foundations will be reported, if at all, in future Forms 990-PF to be filed with the Internal Revenue Service (the ”IRS”) by such foundations. It is possible that there could even be excise taxes imposed by the IRS with respect to such foundations’ inclusion for the reasons raised in Installments 75 and 76.
5. If the Settlement Agreement remains undisturbed, it will be a number of years, perhaps as many as six, before we know, what, if anything, the Wilpons will be required to pay out of pocket.
In light of the foregoing, the approval of the Settlement Agreement by Judge Rakoff may not be the final word that would satisfy Yogi that the Wilpons’ matter is "over."
(Michael J. Kline, 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.)
[To be continued in Installment 79]