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Monday, February 20, 2012

NY Times: Trustee Says Mets Saw Madoff as House Money

Maybe Wilpon and Katz meant to say they invested in the Vanguard Dividend Appreciation Index Fund…

Saul Katz called it the Madoff “vig.”

Vig, or vigorish, is a gambling term, meaning the money a bookmaker collects on every bet taken, regardless of the outcome — a kind of dependable handling fee.

To the court-appointed trustee suing Katz and Fred Wilpon, the owners of the Mets, the Madoff “vig” was, quite simply, evidence of the men’s implausibly unyielding faith in Bernard L. Madoff’s steady investment returns, and the men’s dependence on those returns to help finance their businesses and deepen their personal wealth.

The trustee, Irving H. Picard, asserts that Katz and Wilpon took out bank loans just to invest the borrowed money with Madoff, confident that their returns would be better than the interest on the loan. That was the vig at work.

Katz and Wilpon, according to the trustee, structured player contracts to draw out the timing of their payments. They would then invest the money they owed the players with Madoff and make a profit across the many years of the contract payments. That, too, was the vig. ...

Finally, instead of paying disability insurance premiums for key players on the team, the trustee says, Katz and Wilpon put the money into an account — called “Saul’s cookie jar” — to pay injured players. That, as well, was the vig. ...

The vig was described by David Katz, one of Saul’s sons, during a sworn deposition in late 2010 when he was questioned about one way that the family company, Sterling Equities, made money with Madoff.

“You borrow money at 5 percent and you’d make 10 percent,” David Katz said. “You’d make a ‘vig,’ as my father would say, on the Bernie investment.”

The lawyer deposing Katz, according to a transcript of the proceeding, briefly appeared confused by the term.

“You’d make a vague?” the lawyer asked.

Katz said, “Vig, vig, vigorish.”

“Oh, vig, as in v-i. ...,” the lawyer responded.

Katz said: “Oh, don’t even ask. Sorry.”

bobm Posted: February 20, 2012 at 11:12 PM | 4 comment(s) Login to Bookmark
  Tags: business, mets

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   1. will Posted: February 21, 2012 at 11:08 AM (#4065454)
Take away everything they have, and let them live on their Social Security......That would be justice.
   2. Crispix reaches boiling point with lackluster play Posted: February 21, 2012 at 11:36 AM (#4065474)
Further evidence that "investing" is usually indistinguishable from gambling. "Investing" that isn't gambling I would call "saving".
   3. Swedish Chef Posted: February 21, 2012 at 11:45 AM (#4065486)
Further evidence that "investing" is usually indistinguishable from gambling. "Investing" that isn't gambling I would call "saving".

The only difference between gamblers and savers is that savers don't believe they risk losing their money, but there are no safe havens.
   4. Xander Posted: February 21, 2012 at 11:56 AM (#4065496)
It's just so amazing that the the rationale which motivated the deferred Bonilla payments was based on the principles of the largest economic scam in the history of the world. That's basically the only way that contract structure makes sense.

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