Sterling Equities Inc., the investment firm led by New York Mets baseball team owner Fred Wilpon, said it has accounts at Bernard L. Madoff Investment Securities LLC, and is “shocked” by its founder’s alleged confession to fraud.
By Josh Fineman and Peter S. Green
Dec. 12 (Bloomberg) -- Sterling Equities Inc., the investment firm led by New York Mets baseball team owner Fred Wilpon, said it has accounts at Bernard L. Madoff Investment Securities LLC, and is “shocked” by its founder’s alleged confession to fraud.
“Among our various investments, we have accounts managed by Madoff Securities,” Sterling Equities said in a statement today. “We are shocked by recent events and, like all investors, will continue to monitor the situation.”
Bernard Madoff confessed to employees this week that his investment advisory business was “a giant Ponzi scheme” that cost clients $50 billion before two FBI agents showed up yesterday morning at his Manhattan apartment.
Sterling Equities, an investor in residential and commercial real estate, is ensnared in the alleged Madoff fraud at a time when New York City vacancies are rising and rents are falling as the city is forecast to lose about 165,000 jobs this year, including 35,000 in the financial industry.
Wilpon and partner Saul Katz founded Sterling Equities in 1972, and bought a minority interest in the Mets in 1980 and became full owners in 2002, according to their Web site.
The Mets, who finished in second place in the National League’s Eastern Division, on Dec. 10 agreed to pay $37 million over three years for relief pitcher Francisco Rodriguez, according to the New York Times. The 26-year-old right-hander made $10 million last season with the Los Angeles Angels. The Mets recently sold the naming rights to a new ballpark in Queens to Citigroup Inc. for $400 Million over 20 years.
“This news does not affect the day-to-day operations and long-term plans of the Mets organization and the Citi Field project,” the team said in an emailed statement.
Fund Raising
Sterling Equities controls Sterling American Property Inc., a real estate investment firm that runs five property funds, and began raising money for a sixth fund, Sterling American Property VI, according to reports in the trade publication Real Estate Alert.
The fund plans to raise as much as $800 million to buy distressed real estate debt. Sterling will contribute $180 million of equity to the fund, according to the report.
In the early 1990s, Sterling joined up with Bankers Trust Co. to buy more than $1.6 billion of mortgages and other assets from the Resolution Trust Corp. that administered the assets of failed savings and loan associations, Real Estate Alert said.
Sterling owns the Mets’ minor league farm team, the Brooklyn Cyclones, and founded SportsNet New York, a cable television station that shows Mets games.
Investors, ranging from hedge funds that depend on outside managers to wealthy individuals, entrusted their money to the 70- year-old Madoff, who told employees before his arrest that his firm was “one big lie” and may have cost clients as much as $50 billion.
To contact the reporters on this story: Josh Fineman in New York at jfineman@bloomberg.net; Peter Green in New York at psgreen@bloomberg.net
Last Updated: December 12, 2008 17:42 EST
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