Thanks to some fantastic reporting by Serge Kovaleski and David Waldstein in the Times, we've got a lot better idea of just how close Bernie Madoff was to the New York Mets and owner Fred Wilpon. Deferred money in contracts, for example, went into Madoff's "fund" for investment. Whatever happened, the players would get their money -- you can breathe now, Bobby Bonilla -- but meanwhile the Mets would make a tidy profit, too.
But wait, it gets a lot worse:
But Mr. Wilpon involved more than his team with Mr. Madoff. He also encouraged certain friends to invest.
Robert Tischler was such a friend. A onetime fellow commuter on the Long Island Rail Road with Mr. Wilpon — they would meet on the platform of the Manhasset station before Mr. Wilpon made it big — he came to own a piece of an apartment building with Mr. Wilpon and Mr. Wilpon’s brother-in-law, Saul Katz. When the men sold the building in the 1980s, Mr. Wilpon and Mr. Katz, who owns a portion of the Mets, suggested that he invest some of his profits from the deal with Mr. Madoff, he said.
"The numbers were always going up and never going down," Mr. Tischler said. "I was withdrawing $65,000 to $70,000 a year from my Madoff accounts. They were part of my living expenses.
"It was terrific," he said, "until the day of the disaster."
The Day of the Disaster.
Sounds like a hurricane, or one of those tornadoes that used to just drop out of the sky with no warning, because America was blanketed by sophisticated weather radar. Maybe a great title for a lousy movie. Instead of something that should have given all of Madoff's ultra-successful investors at least some brief pause.
And it seems that Madoff was directly involved with the Mets' finances:
One former executive with the Mets recalled how it could work:
"I remember vividly Madoff’s name being brought up a lot when" the team "would negotiate contracts, particularly with deferments," said the former executive, who would not be identified because he did not want to harm his career in baseball. "That money would be turned over to Madoff.
"And as part of friends and family of the Mets, they offered people the opportunity to invest in Bernie. There was talk about Bernie averaging like 15 percent for the Wilpons. It just seemed too good to be true, but then you think the owner has vetted it."
Right. Always trust the boss. Especially when you're getting your 15 percent.
In those cases, the players would agree to take less money up front and be paid over a number of years, earning interest. It appears the Mets would be able to keep any money earned over that agreed rate, and Mr. Madoff regularly produced returns that outdid prevailing interest rates.
And when the costs of disability insurance spiked, the former employee recalled, the Mets began to self insure. They did it by investing premiums with Mr. Madoff, he said.
"He was an investment vehicle that existed for Fred and the organization," one former employee said. He added, "I always wondered why Bernie was smarter than everyone else."
Actually, for a long time he was smarter than most con men.
Madoff was guilty of a felony. Well, hundreds or thousands of felonies if you want to get technical about it.
Wilpon was guilty of a deadly sin: greed (or if you prefer Latin, avaritia).
Coincidentally, Tuesday afternoon I heard a brief interview with Dan Goldie, co-author (with the late Gordon Murray) of The Investment Answer: The Five Key Decisions Every Investor Needs to Make.
It's not a large book. Not even 100 pages. This stuff isn't complicated. Among the key decisions, No. 1 is don't be an active investor, as passive investors "will, over the long run, do better than the rest, who are actively trying to manage their portfolio. In doing so, they generally incur more expenses, higher taxes, and those activities that reduce their returns. So the ironic thing is that, usually with investments, over the longer haul, the harder you try to do better, the worse you do."
Granted, if you've got rich and powerful friends, and access to inside information, maybe you really can beat the market. But not by 15 percent, year after year. You don't do that well over the course of decades unless you're cheating. If Wilpon didn't know that, he was foolish. If he did know, if he had even the slightest inkling that something was wrong, he was avaricious and nearly as culpable as Madoff.
In The Edge, Anthony Hopkins tells Alec Baldwin, "Never feel sorry for a man who owns his own plane."
Sage advice. Still, when a man who owns his own plane has been bilked out of many millions of dollars and is exposed as a fool (at best), we might spare a smidgeon of sympathy for the Wilpons.
But just a smidge. A tiny tiny smidge.