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Monthly Archives: January 2011
Kallas Remarks by Steve Kallas
It doesn’t seem to be getting any better for the Wilpon family. Real-estate hasn’t been very good for a few years. The New York Mets haven’t been very good for a few years. And now, with a sealed lawsuit hanging over their heads in the Madoff case, comes word from the New York Times about a strange older case where an investment firm started by Fred Wilpon and Saul Katz, his brother-in-law and partner, had to pay back $13 million two years ago when a hedge fund collapsed due to fraud.
THE MADOFF CASE
It’s hard to decipher all of the case (or cases) against the Wilpons, the Mets and all the related entities. The “clawback” case that has been in the news is a relatively simple one: when you take out more money than you put in to an investment and the company goes bankrupt, a trustee can come after that differential whether the Wilpons had any knowledge of the fraud or not. Obviously, however, it’s much worse if they were involved, had knowledge or, those dreaded words, “should have known” about the wrongdoing.
In the specific clawback case filed in the bankruptcy court in the Southern District of New York, trustee Irving Picard is suing Wilpon and Katz for at least the difference between the $522.7 million that they put into Madoff accounts and the $570.5 million that was taken out (that is, a profit of $47.8 million).
When the suit was announced in early December 2010, the Mets organization, and especially Jeff Wilpon, Fred’s son, repeatedly said that it would have no impact on the Wilpon family’s ability to run the Mets franchise.
Until they announced this past Friday that it would.
FEBRUARY 9 IS THE BIG DAY
While there has been much speculation as to how much the trustee is trying to get from the Mets (hard to believe even a $47 million loss would cripple the Wilpons so much as to seek a “minority partner or partners” for the team), it’s hard to figure out what exactly is going on. Are there numerous suits relating to Wilpon entities that put the Wilpons and the Mets at risk for a loss of hundreds of millions of dollars (everyone now seems to agree that the $1 billion number bandied about last week is way too high)? Did the Wilpons and Katz have any knowledge of the wrongdoing? Did the Mets borrow against monies they turned out not to have, causing them severe cash flow problems?
These are just a few of many questions that need to be answered.
Lots of information on these and other fascinating questions may well be answered in bankruptcy court in Manhattan on February 9, 2011. The New York Times and WNBC Channel 4 have filed a motion in the bankruptcy court to unseal the court records relating to the Madoff/Mets case(s).
Nobody even seems to know at this point why the case(s) was sealed in the first place. A rare occurrence, usually there must be some very good reason, like a trade secret that couldn’t be disclosed or some other confidential business information.
It’s very hard to seal a complaint and many legal experts have spoken out against such a holding in this particular case. Here’s what part of the motion says:
“To the extent there are any allegations of financial impropriety by the team’s owners, the taxpayers who have provided them substantial financial support have the right to know about it.”
Yikes! That’s a direct reference to the $300 million dollars of taxpayers’ monies that were given to the Mets over the last few years. Scary stuff, no?
It would be hard to see how a judge will justify not making this and maybe other complaints public. At a minimum, the judge will have to explain why they were sealed in the first instance. A viewing of this and other related lawsuits would shed more light on the problems of the Mets and their owners
BUT IT ONLY GETS WORSE FOR WILPON AND KATZ
Now the New York Times is reporting that something similar to the Madoff scam has already occurred with a company founded by Fred Wilpon and Saul Katz. According to an article written by Alison Leigh Cowan in the Times, Wilpon and Katz started an investment firm that, two years ago, had to pay back nearly $13 million when a hedge fund collapsed from a Ponzi scheme.
The Times goes into the many similarities between this $450 million fraud, perpetrated by Samuel Israel III (now serving 22 years in prison), and the Madoff scam. The firm that Wilpon and Katz started, called Sterling Stamos, was accused of withdrawing money from a Sam Israel-entity named The Bayou Group after detecting evidence of possible fraudulent activity. Because of this alleged knowledge, lawyers for the defrauded went after Sterling Stamos for more than the $30 million that they took out (possibly something that the trustee in the Madoff case is trying to do; that is, go far beyond the simple “clawback” number of $47.8 million).
Sterling Stamos settled the case for the afore-mentioned $13 million with no admission of liability. In the present Madoff case, Fred Wilpon announced on Friday that his lawyers are trying to settle the present suit by Irving Picard, the Madoff trustee. As to the older case, a spokesman for the Mets said that Wilpon and Katz would not comment.
In a further bizarre side note, the third partner, Peter Stamos, a brilliant Rhodes Scholar and Harvard Law School graduate, was married for 29 days to fellow law school student Silda Wall, years before she married former Governor Eliot Spitzer. According to the Times, a spokesman for Mr. Stamos declined to comment.
Is there a movie here somewhere or what?
SO, WHERE DO WE GO FROM HERE?
Well, in this writer’s opinion, much will be determined on February 9, unless the lawyers for Wilpon and Katz find out a way to globally settle the case by then. If they don’t, it will be hard to understand how the present Madoff cases will remain sealed. If unsealed, many (but not all) questions may be answered. As for the Times uncovering of the older hedge fund fraud, that is nothing but bad news for Fred Wilpon and Saul Katz.
Whether they like it or not, they’ve got a lot of explaining to do. It will be hard to dance around the cumulative impact of what’s going on.
It’s now tougher than ever to be a Mets fan, don’t you think?
© Copyright 2011 by Steve Kallas. All rights reserved.
Kallas Remarks by Steve Kallas
The Jets had another fine season, made an excellent run in the playoffs – and came up short again. But the 24-19 Steeler loss was a winnable game – even after the disastrous start. A number of issues linger, some of which will impact the team in the future.
WHY GO FOR IT ON 3RD AND 17?
Jet fans will remember the situation: Jets are shockingly down, 17-0, very late in the first half. The Steelers kick off and the Jets have the ball, 1st and 10 on their own 33, with 1:53 in the half. The Jets have all three of their timeouts left; the Steelers have one left.
Clearly, on first down, with plenty of time and three timeouts, the Jets have to try and move the ball and make a play. If they were on their own five or ten-yard line, it might be a conversation; that is, maybe the Jets should run out the clock and go in down 17-0 but getting the ball to start the second half.
So the Jets make the right decision. But Sanchez drops back to pass and gets sacked, making it 2nd and 17 on the Jet 26. Time, at a minimum, for a conversation on the sidelines. A conservative coach probably would have run on second and third down, making Pittsburgh use their only remaining time out and then punting the ball away (unless they broke a big running play, impossible in the first half this past Sunday).
But the Jets, if nothing else, like to push the envelope, so, with 1:27 left in the half, they come out on 2nd and 17 and throw the ball down the field. Almost picked off (something that should have given someone on the Jet sideline a clue), the Jets now have another decision: run the ball, make the Steelers lose their final timeout and punt it away, or take another (long) shot at getting the first down.
Surprisingly, not understanding the situation, the Jets call another pass play, the Steelers, not surprisingly, bring the whole team and Ike Taylor strip-sacks Sanchez, William Gay picks up the loose ball and scores a touchdown. 24-0, 1:13 left, for all intents and purposes (despite an excellent comeback), game over.
When to call off your attempt to score (that is, when the risk of trying outweighs the reward of scoring) is a feel thing. On 1st and 10, on your own 33, down 17, you have to take a shot down the field. But when you go backwards and it’s 2nd and 17 on your own 26, that’s cause for concern and a close call. By the time it’s 3rd and 17, it’s time to bail and wait for the second half.
Clearly, there was nobody in a position of power on the Jet sideline to weigh the options and come out with the right decision.
Compare it to just a few seconds later. Down 24-0, 1:08 left and with 1st and 10 on their own 30, the Jets moved the ball down the field. They never lost yardage, they never had 2nd or 3rd down and more than 10 (that is, they never had a sack), and they were able to get into field goal position to make it 24-3 at the half.
It’s not just about half-time adjustments in the NFL. It’s often about the ability to change things and understand what’s going on during any particular series of downs. The Jets failed miserably to understand how the risks changed within that set of downs.
And it cost them the game.
TO DEFER OR NOT TO DEFER, THAT IS THE QUESTION
The Jets, apparently specifically Rex Ryan, decided to defer if they won the coin toss the whole season (we’ll get to the one exception in a minute). Probably based on the false notion that the defense this season would be as good as the defense last season, it seemed to make sense.
Except that it didn’t. Not only was the defense nowhere near as dominant as last year (maybe because Revis held out, but more likely because the league learned how deal with the Jets blitz packages – confusing last season, easy to deal with this season). In addition, Mark Sanchez was a better QB this season.
So, the defer-every-time theory was flawed from the get-go.
Criticized all season, Rex Ryan, essentially giving in to the critics, finally decided to take the ball when the Jets won the toss. That led to a quick three and out, I believe in the Miami debacle, and Ryan reverted to defer, defer, defer.
Meanwhile, the Jets became the lowest scoring team in the NFL in the first quarter. But that actually makes some sense. If you are going to defer every time, by definition you are going to have the ball much less in the first quarter. You don’t have to be a brain surgeon or an NFL head coach to understand that, the less times you possess the ball in the first quarter, the less likely you are to score.
But, again, the Jets coaching staff didn’t seem to grasp that, especially with a defense not as good as last season.
It wasn’t until the Steeler game that it became obvious, even to people without a clue. The Steelers took the opening kick, went on a NINE-MINUTE (9:06, to be exact) drive, and went up 7-0. In addition to the fact that the offense sat for virtually the whole first quarter, the Jets only got the ball once in the first quarter, held it for just under four minutes, punted it away and (again) didn’t score in the first quarter.
But that’s not surprising.
Like whether to throw the ball on 3rd and 17 in your own territory late in the half, to defer or not to defer is a feel thing. If the Jets didn’t know that before Sunday, they learned it on Sunday against the Steelers.
Hopefully, they will get the point and change accordingly.
RUN OR PASS AT THE GOAL LINE?
Jet fans remember the situation: Down 24-10, just under nine minutes left in the third quarter, the Jets have first and goal from the two. They go run, pass, pass, run and don’t score. Lots of criticism heaped on the Jets, but this, too, is a feel thing.
I don’t think this is necessarily a place to jump all over the Jets (as many have), but know this: if you are going to throw from the two (or frankly, from ANYWHERE on the field), the best down to go play-action is FIRST down, not second, third or fourth.
The other key factor is that, on the third down slant that Sanchez tried to throw, the QB has to see if someone like Lamar Woodley is dropping back into pass coverage; on that particular third down play, Sanchez has to take the ball down and try to make a play elsewhere. He threw it right to Woodley, and the Jets were fortunate not to have the ball intercepted.
Finally, the Jets should have gone with Greene over Tomlinson on fourth down if you are actually going to try and overpower the Steelers up the middle (a virtual impossibility, as well). Frankly, it’s unlikely that any back was going to score up the middle against the Steelers in that situation.
Again, live and learn.
WHAT’S THE FUTURE FOR THE JETS?
Well, it’s an interesting one, to say the least. The problem for the Jets (collective bargaining issues and roster issues aside) is that they are now in a group of five teams that are very close: the Steelers, the Patriots, the Colts, the Ravens and the Jets.
The Ravens are probably fifth on the list; Joe Flacco may not be the answer and they have an aging, not-as-good-as-they-once-were defense. But the Steelers have it going on on both sides of the ball and will be tough to beat in the next few years.
The Patriots, who always seem to beat the Steelers, have their own issues but, with six draft picks in the first three rounds, their defense, already on the improve, will be very good next season. Tom Brady’s broken foot aside (he certainly looked old in the pocket against the Jets), everybody will plug in the Jet win tape to see how they stopped that Patriots vaunted offense. But the Pats won their Super Bowls with excellent defenses and, if their defense gets back near that level, they will be very tough to beat.
The Colts are always a threat with Peyton Manning, but they have to get healthy and reload on both sides of the ball. Their window is closing rapidly.
The Jets have an improving offense and Rex Ryan seemed to understand that, on defense, they will have to dial back the blitzes or they will get burned.
It says here that the Steelers, the Patriots and the Jets are legitimate title contenders with the Steelers and the Patriots getting a slight edge over the Jets. The Ravens and the Colts are on the down side, but still are legitimate AFC threats next season.
It will be fascinating to see what happens.
© Copyright 2011 by Steve Kallas. All rights reserved.