More bad news for Fred Wilpon and Saul Katz: debt of Citi Field has been downgraded by Moody’s because of concerns over ties between the New York Mets ownership and disgraced felon Bernie Madoff, as well as an impending clawback lawsuit.
“While the ultimate outcome of the litigation and the timeframe for final resolution are unknown at the present time, the negative outlook acknowledges the close connection between the health and performance of the Mets baseball team and the long term credit quality of the stadium project,” Moody’s said.
The bonds for Citi Field were issued by the New York City Industrial Development Authority; the Mets are obligated to pay them off. It’s not entirely clear what the practical effect of the downgrade means; the bonds are already rated at a junk-bond status by Moody’s.
The Wilpons and the Mets were all investors in funds managed by Bernie Madoff, but the funds weren’t legit: they were part of a huge Ponzi scheme that ended up causing thousands of clients to lose their investments, but apparently the Wilpons actually profited from their investments. So-called “clawbacks” are filed by a bankruptcy trustee against those who actually received more proceeds from the Ponzi scheme than they invested, on the theory that they were sharing in the proceeds of the fraud. A bacnkruptcy trustee has indicated he may seek up to a billion dollars from Sterling Equities.
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