Deposition testimony of Noreen Harrington, a potential witness for Madoff trustee Irving Picard in the lawsuit he has brought against the New York Mets owners, indicates that Mets owner Saul Katz may have known about several concerns surrounding investments with Bernard L. Madoff. Contained in a court pleading filed February 9, 2012, Harrington's deposition testimony indicates that she informed Katz that Madoff's investment performance may be pure "fiction." In the lawsuit, Mets owners Katz and Fred Wilpon are accused of ignoring the signs of Madoff's dubious investment performance and improperly benefiting from their investments with Madoff. Harrington appears to be a respected financial executive with more than 20 years experience working in hedge funds with a resume that includes positions within Goldman Sachs, Barclays Capital and the investment firm M.D. Sass.
Harrington was hired in 2002 to work for Sterling Stamos, a hedge fund founded by Wilpon, Katz and Peter Stamos. In 2003, Harrington met with J. Ezra Merkin, a hedge fund manager that steered much of his clients' money into Madoff accounts. Harrington testified that her efforts to inquire into Madoff's investment practices were met with scorn and that she was told by Merkin, "[y]ou don't get it, do you? . . . This is a privilege. You don't get to ask questions." Harrington further testified that she informed Katz of the meeting and accused Madoff of either "front-running" – a form of illegal insider trading – or that Madoff's investment practices were "fiction." After receiving an angry response from Katz, Harrington testified that she admitted that she had no proof that Madoff was a fraud and asked for the opportunity to meet with Madoff. However, that request was ignored. As time went on, Harrington's faith in Madoff's investment practices was dwindling, and she testified that she told Katz and several other Sterling Stamos individuals that she did not "believe the numbers are worth the paper they're written on." Harrington testified that she resigned from Sterling Stamos after learning that her superiors were going to invest with Madoff despite her warnings, stating "[i]f you're going to make this investment, I'm gone."
When asked under oath, Katz testified that he had no memory of meeting with Harrington or of her warnings against Madoff. Trial for this matter is currently set for March 19, 2012. ("A Court Filing Says a Mets Owner Knew of Madoff Concerns," The New York Times, February 10, 2012).