Last Friday, Erin Arvedlund rashly predicted that Fred Wilpon, owner of the New York Mets, will be forced to sell the team after the season is over as a result of $700 million in Madoff-related losses. Arvedlund is the author of "Too Good to Be True", the best book about Bernie Madoff publisnhed to date.  

I say "rashly" because, one, Wilpon's financial affairs are too complex to be reduced to a blanket statement and, two, there is an ongoing criminal investigation of Bernie Madoff.

You can't explain why Wilpon might have a big clawback problem in a 90-second sound bite. If Wilpon withdrew a lot more money from his Madoff accounts than he put in, the bankruptcy trustee can sue Wilpon for the net amount withdrawn. 

Nor is it easy to explain that Wilpon's lenders could be pressuring him if he used Madoff accounts as loan collateral. Wilpon's primary business is real estate and real estate deals are generally highly leveraged. It's no secret either that commercial real estate is in a tailspin and I'm sure at least some of Wilpon's properties have decreased in value, especially those in Manhattan.       

Fred Wilpon was a business associate and friend of Bernie Madoff's for more than thirty years. If they haven't already, the Feds are going to scour the Madoff financial records for any evidence that Bernie gave Wilpon special treatment in the form of unduly high profits, tailored account statements or any other unusual consideration.  

I culled more than 500 accounts from the Madoff customer list that appear to relate to Wilpon as possible family members, investors, business associates, business entities or non-profit institutions. The Wilpon-related accounts are listed on a spreadsheet posted at Scribd.

There are about 185 accounts in the name of Sterling Equities alone and investigators will want to know if each account had a specific purpose or had specific financial terms attached to it. 

Accounts in the name of Judy Wilpon and Iris Katz have identical letters attached to their account names, e.g. "Judy A. Wilpon - K Sterling Equities".  Judy is married to Wilpon and Iris is married to Wilpon's partner and brotherr-in-law, Saul Katz. It looks like the spouse accounts were set up to systematically track funds deposited equally in the respective accounts. K, T, O and W are the only letters left outstanding.

Given the name of the accounts, a couple of the Wilpon-related accounts appear to be linked to aircraft. Wilpon may have used profits generated from the Madoff accounts to make lease payments on his planes or the the accounts could have been posted as collateral in connection with lease agreements.

One of the Wilpon-related accounts is the Sterling Equities Employees Retirement Plan. I took a look at the 5500s filed by the plan (which are available online at FreeErisa.com). At the end of 2007, 214 plan participants had account balances.

At that time, the plan had $16.2 million invested in government securities which comprised almost all of the plan's assets. Since Bernie always converted to treasury bills at the end of a calendar year, the entire $16.2 million may have been invested with him. The fact that plan had aggregate proceeds of $62 million from the sale of assets is another indication  Bernie held the $16.2 million.

If Wilpon's employees lost more than $16 million in the Madoff scandal, did Wilpon cover the loss as a goodwill gesture? Normally, an employer would capitalize on free publicity if that was the case. If Wilpon didn't pick up the tab,  my guess is the plan participants will have some hard hitting questions about how the plan trustees carried out their fiduciary responsibilities.

Who audits Wilpon's multi-billion dollar empire? Last weekend, Robert DuPuy, Major League Baseball president, told the New York Times that he receives quarterly financial reports from the Mets. Do the Mets also provide audited annual financial statements?

The only independent CPA I could find who is associated with Wilpon is Douglas J. Freeman who apparently owns a produce company in Jericho, NY. Freeman signed off as the preparer of the retirerment plan's 2007 5500 and as the preparer of the New York Mets Foundation 2006 990s. Oddly enough, the foundation filed two 990s in 2006 as two different types of non-profit entities. The foundation's 2005 and 2007 990s are not in the 990 Finder or Guidestar databases which could mean they were never filed in the first place.

Douglas J. Freeman may be the world's best accountant but if he is auditing Wilpon's multi-billion empire singlehandedly, the comparison to Bernie's hapless auditor is inevitable. I suppose I should be surpised if Wilpon's lenders accept financial statements audited by Mr. Freeman.

In 2005, Wilpon's hedge fund. Sterling Stamos, lost money in the Bayou hedge fund fraud. That's the one where the fund operator fabricated an entire accounting firm out of thin air. If the Bayou scandal didn't wake up Wilpon and his fund manager, Peter Stamos, as to what was going on at Bernie's, you have to wonder what would have done the trick.

The day after Bernie was arrested, Stamos claimed Sterling Stamos funds did not have any money invested with Bernie. But within two weeks, Stamos changed the story and admitted that six of the the Sterling Stamos funds had two to three percent of their assets invested with Bernie through another fund operated by Ezra Merkin. There was also a seventh fund invested in Madoff that was in the process of being liquidated.

Stamos apparently had personal Madoff accounts but he has not publicly disclosed his losses, if there were any. 

Lastly, there was a Sportsmen's Daily article via the Huffington Post last February about Wilpon hitting up players for temporary loans. His son, Jeff Wilpon, didn't deny it. He said the Wilpons had their money tied up in investments, implying that Wilpon had a temporary cash flow problem.

Maybe Wilpon really is over the hump. Perhaps his lenders were willing to revise loan agreements and waive collateral requirements. But will that be enough if the real estate market doesn't turn around soon? 

Stay tuned.