Like always when you start to dig around the Mets, things start to stink. An interesting article in the New York Times today outlines that the Madoff Ponzi Scheme may not have been the first illegal investing scheme that the Wilpons escaped with a profit.

Their survival of the previous scheme was so concerning that they settled out of court with the victims of the Samuel Israel III Bayou ponzi scheme.

But for the owners, Fred Wilpon and Saul Katz, it is not the first time they have had their names and personal fortunes roughed up in a Ponzi scheme. An investment firm started by the two men had to pay back nearly $13 million two years ago when a hedge fund run by the scion of a wealthy New Orleans family collapsed in what was then regarded as one of Wall Street’s more brazen frauds.

It seems the common thread in the two scandals is the fact that it’s felt the Wilpons at the least should have known something wasn’t right. It sure seems that they did considering they were able to withdraw their money just in time before the funds collapsed.

According to two lawyers involved in the case against the Mets, the trustee, Irving H. Picard, argued in a lawsuit filed in December that the history of Wilpon and Katz’s dealings with Madoff meant they knew or should have known it might be a scheme, and that, as a result, other victims were entitled to hundreds of millions of dollars above and beyond what Sterling Stamos might have made as profits. “Some of the legal principles adopted in Bayou are the same ones that the trustee is applying,” said Richard Kirby, the lead lawyer for the creditors committee in the Bayou case.

At the very least this is NOT looking good for the Wilpon family. Even if they are not criminally liable for any of their actions, it sure seems as though this trustee is after large sums of money from them. All the money aside this has already been a huge embarrassment for the family name and from the looks of it continue to get worse.

The Wilpons and Madoff had business dealings going back and forth for a long time. Madoffs wife was invested in several ventures by Wilpon owned companies. This tangle of investments will make it very hard to settle and is the reason many think the Madoff trustee could be targeting up to a billion dollars in a lawsuit directed at the Wilpons.

Let’s just hope that in this case the old saying of “where there is smoke there is fire” proves to be false.