The Mets and Madoff: “Bernie was part of the business plan for the Mets”

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Fred Wilpon has insisted since 2008 that the Bernie Madoff mess had little impact on the Mets’ baseball operations.  Even since last week, when it was announced that he would have to sell part of the team due to the Madoff losses, the sense has been that they are exclusively personal losses and that since the team is the Wilpons’ largest asset it was logical that he turn to the team for his capital needs.

There’s an article in today’s New York Times, however, which tells a far different story: Bernie Madoff and his investments were deeply involved in the Mets, and the Mets operations were highly dependent on Bernie Madoff:

When the Mets negotiated their larger contracts with star players — complex deals with signing bonuses and performance incentives — they sometimes adopted the strategy of placing deferred money owed the players with Mr. Madoff’s investment firm. They would have to pay the player, but the owners of the club would be able to make money for themselves in the meantime. There never seemed to be much doubt about that, according to several people with knowledge of the arrangements.

“Bernie was part of the business plan for the Mets,” a former employee of the club said … interviews with current and former associates of Mr. Wilpon and Mr. Katz, as well as former employees of the club, former employees of Mr. Madoff and others, make it clear that the relationship was substantial and that the role Mr. Madoff played in the financial life of the ball club and the Wilpon and Katz families was pervasive.

The more damning part of the article, however, involves the way that the Wilpons would steer friends and even Mets employees to Madoff investments.  Indeed, former Mets GM Frank Cashen says that his deferred compensation package after leaving the Mets was invested with Madoff.  He was paid before the bottom fell out, but he says that Wilpon and Madoff worked “in unison” he says that Wilpon and his partner Saul Katz worked “in unison” to push Mets employees to invest in Madoff securities. That famous Bobby Bonilla deferred money deal was also invested with Madoff.  Madoff also reportedly got many of his investors via introductions from Fred Wilpon, who the bankruptcy trustee suing him alleged knew or should have known that Madoff was a scam artist.

If what the many sources of this article say is true, the Wilpons are more than the victims they’ve made themselves out to be.  They were an important part of Madoff’s operation, whether they themselves knew the nature of the operation or whether they simply placed stupid blind faith in their close friend.

And there is no question that, by virtue of placing team-related investments with Madoff, the financial prospects of the Mets — and not just the Wilpons — was deeply harmed as a result.

Unprecedented sanctions: MLB bans former Braves GM for life, makes 12 signees free agents

Associated Press
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Major League Baseball has slammed the hammer down on the Atlanta Braves as the result of their violations of rules on the international free agent market.

Former Braves General Manager John Coppolella has been placed on the permanently ineligible list — the same list Pete Rose is on — banning him from a job in baseball forever. His assistant, Gordon Blakeley, will be suspended for a period of one year. Each had already been dismissed by the Braves. Other Braves’ international baseball operations employees who participated in the misconduct could still be suspended as the league finishes its investigation.

As reported earlier, 12 of the clubs’ international signees are now free agents. The Braves will lose the following players, signed during the 2015-17 international free agent signing periods:

  • Juan Contreras;
  • Yefri del Rosario;
  • Abrahan Gutierrez;
  • Kevin Maitan;
  • Juan Carlos Negret;
  • Yenci Peña;
  • Yunior Severino;
  • Livan Soto;
  • Guillermo Zuniga;
  • Brandol Mezquita;
  • Angel Rojas; and
  • Antonio Sucre

As reported earlier, Maitan was the number one overall international prospect in 2016. The Braves have, for a few years now, had among the top international signee classes. Obviously that came by virtue of cheating the system, and obviously that will lead to a reevaluation of where the clubs’ minor league system stands, talent-wise.

The penalties are not limited to the loss of those players. Commissioner Manfred is imposing what amounts to punitive damages going forward. From Commissioner Manfred’s statement:

“While the remedies discussed above will deprive the Braves of the benefits of their circumvention, I believe that additional sanctions are warranted to penalize the Club for the violations committed by its employees. Accordingly, the Braves will be prohibited from signing any international player for more than $10,000 during the 2019-20 signing period, which is the first signing period in which the Braves are not subject to any signing restrictions under our rules; and the Braves’ international signing bonus pool for the 2020-21 signing period will be reduced by 50 percent.”

There was also what appears to be an unrelated draft violation, imposing penalties along those lines as well:

“The investigation also determined that the Braves offered impermissible benefits, which were never provided, to a player they selected in the First-Year Player Draft in an attempt to convince him to sign for a lower bonus. As a penalty for the Club’s attempted circumvention involving a draft selection, the Braves will forfeit their third-round selection in the 2018 First-Year Player Draft.

The gist of the violations against the Braves involves the bundling of signing bonuses, in which the Braves got players — through their representatives in Latin America — to take lower than the amount typically allotted in one year in order to use the money to sign other, highly rated players in subsequent years, with money they wouldn’t have otherwise had. MLB’s statement describes the scheme thusly:

“The investigation established that the Braves circumvented international signing rules from 2015 through 2017. During the 2015-16 international signing period, the Braves signed five players subject to the Club’s signing bonus pool to contracts containing signing bonuses lower than the bonuses the Club had agreed to provide the players. The Club provided the additional bonus money to those players by inflating the signing bonus to another player who was exempt from their signing pool because he qualified as a ‘foreign professional’ under MLB rules.

“Consistent with the rules, the Braves could have signed all of the 2015-16 players for the full, actual signing bonus amounts. Had the Club signed the five players to contracts containing their actual bonuses, however, the Braves would have exceeded their signing bonus pool by more than five percent and would have been, under MLB rules, restricted from signing any players during the next two signing periods for contracts with bonuses greater than $300,000.

“As a result of the 2015-16 circumvention, the Braves were able to sign nine high-value players during the 2016-17 signing period who would have been unavailable to them had the Club accurately accounted for its signings during the 2015-16 signing period.”

The scheme continued like this:

“The investigation also determined that the Braves: (i) agreed to sign six players to inflated signing bonuses pursuant to an agreement with prospect Robert Puason’s agent in exchange for a commitment that Puason would sign with the Club in the 2019-20 signing period; and (ii) offered prospect Ji-Hwan Bae extra-contractual compensation. In order to remedy these violations, I am prohibiting the Club from signing Robert Puason when he becomes eligible to sign, and disapproving the contract between Bae and the Braves, which has not yet become effective.”

This is, by far, the most serious set of scouting, drafting and signing penalties ever imposed by Major League Baseball. It speaks to the sheer audacity of the Braves’ scheme to circumvent signing rules. It also sends a loud and clear signal to other teams — many which have been rumored to have engaged in similar conduct on a smaller scale — that MLB will not tolerate it.

The Braves lower minor league system has been decimated. It stands, essentially, as the head on the pike outside of Major League Baseball’s castle.