(Reuters) - Owners of the New York Mets struckout as a federal judge refused to dismiss a $386 million lawsuit by the trustee seeking money for victims of Bernard Madoff's fraud, clearing the way for a possible March 19 trial.
U.S. District Judge Jed Rakoff in Manhattan also said the trustee Irving Picard is entitled to collect as much as $83.3 million of "fictitious profits" from the owners, led by Fred Wilpon and Saul Katz, without a trial.
While rejecting the owners' bid to throw out the entire case, Rakoff said he nonetheless remains "skeptical" that Picard can prove they acted in bad faith in dealing with Madoff.
He also said he will not allow a jury to consider much of the "evidence" offered by both sides in their bitter, more than year-long legal battle.
"Conclusions are no substitute for facts, and too much of what the parties characterized as bombshells proved to be nothing but bombast," Rakoff wrote.
"Nevertheless," he added, "there remains a residue of disputed factual assertions from which a jury could infer either good or bad faith."
While Monday's decision keeps the case on track for trial, it could also spur settlement talks as the Mets owners try to keep control of their money-losing Major League Baseball team.
Wilpon and Katz have maintained they saw nothing suspicious in their roughly 25 years of investing with Madoff, and "never for a moment" thought their former friend was engaged in a fraud or Ponzi scheme.
The Mets owners, in a statement on behalf of partners at their holding company Sterling Equities, said: "We are preparing for trial. We look forward to demonstrating that we were not willfully blind to the Madoff fraud."
Amanda Remus, a spokeswoman for Picard, said the trustee is reviewing the decision.
JUDGE WANTS FACTS, NOT BOMBAST
In his opinion, Rakoff said Picard can recover fictitious profits that team owners got in the two years prior to the December 2008 bankruptcy of Bernard L. Madoff Investment Securities LLC.
The judge said this amount could be as much as the $83.3 million that Picard claimed, but will be determined later and may require further legal arguments.
Rakoff also said "the court remains skeptical" that the trustee can show the Mets owners acted in bad faith by investing with Madoff during that two-year period.
Last September, Rakoff threw out more than half of Picard's original $1 billion lawsuit.
Mario Cuomo, the former New York governor, has been mediating the dispute. His office did not immediately return requests for comment.
Mets general manager Sandy Alderson has been quoted as saying the team lost $70 million last year.
The Mets have been slashing payroll and selling $20 million minority stakes, each representing about 4 percent ownership of the team. One of these stakes was sold to hedge fund executive Steven A. Cohen of SAC Capital Advisors.
Picard has said he has recovered $9.1 billion for Madoff's victims, although much remains tied up in litigation.
Madoff, 73, pleaded guilty in 2009 to orchestrating what prosecutors have called a $64.8 billion Ponzi scheme. He is serving a 150-year sentence in a North Carolina federal prison.
The case is Picard v. Katz, U.S. District Court, Southern District of New York, No. 11-3605.
(Reporting By Jonathan Stempel in New York; Editing by Mark Porter, Maureen Bavdek, Lisa Von Ahn and Bernard Orr)
