NEW YORK (Reuters) – A federal judge narrowed a $1 billion lawsuit against owners of the New York Mets baseball team by the trustee seeking money for Bernard Madoff’s victims, and cast skepticism on how much might ultimately be recovered.

Tuesday’s ruling by U.S. District Judge Jed Rakoff in Manhattan could help the trustee, Irving Picard, force Mets owners to turn over their alleged $300 million of “fictitious profits” from investing with Bernard L. Madoff Investment Securities LLC, where they were once customers.

But he said Picard could pursue $700 million of principal from the owners, including Fred Wilpon and Saul Katz, only by proving they “willfully blinded themselves” to “red flags” of Madoff’s epic Ponzi scheme, reflecting a lack of good faith.

Team owners had sought to dismiss the lawsuit, claiming they did not suspect Madoff was running a Ponzi scheme, and never bought insurance to protect themselves against fraud.

The lawsuit has threatened the owners’ hold on the Mets, which are losing tens of millions of dollars a year, prompting them to try selling part of the Major League Baseball team.

Talks to secure a $200 million minority investment from Greenlight Capital hedge fund manager David Einhorn broke down three weeks ago.

A spokeswoman for Picard said the trustee had no comment pending a “thorough evaluation” of the opinion. Lawyers for the Mets owners were not available for comment.

Mario Cuomo, the former New York governor mediating the dispute, also had no immediate comment.

Rakoff dismissed nine of 11 counts in what he facetiously called Picard’s “short and plain” 373-page complaint against Wilpon, Katz and others at their firm Sterling Equities.

One surviving claim alleges actual fraud, and the other would subordinate the defendants’ claims against the Madoff firm’s bankruptcy estate to other creditor claims. Among the dismissed claims were some alleging “constructive fraud.”

Rakoff ordered both sides to appear at a hearing Wednesday to discuss what is next in the case. He indicated last month that a trial could begin in March.

HARD TO INVESTIGATE

But in his ruling, Rakoff said the trustee could face an uphill fight to show that Wilpon and Katz failed to act in good faith, and intentionally turned a blind eye to Madoff’s fraud.

“If, simply confronted with suspicious circumstances, (an investor) fails to launch an investigation of his broker’s internal practices — and how could he do so anyway? — his lack of due diligence cannot be equated with a lack of good faith,” the judge wrote.

Summarizing Picard’s amended complaint filed on March 18, Rakoff said the trustee sought to hold Mets owners responsible for their alleged pursuit of “substantial short-term profits,” even as they tried to curb risk by considering fraud insurance and creating their own hedge fund to limit exposure.

“Although the defendants vehemently deny these accusations,” Rakoff wrote, “the amended complaint, while less than overwhelming in this regard, pleads sufficient allegations to survive a motion to dismiss so far as this claim of willful blindness is concerned.”

Picard has filed more than 1,050 lawsuits on behalf of former Madoff customers seeking in excess of $94 billion.

Rakoff oversees the largest of these lawsuits, a $58.8 billion case against defendants including Bank Medici AG founder Sonja Kohn and Italy’s UniCredit SpA.

Another judge is reviewing Picard’s $19.9 billion case against JPMorgan Chase & Co, once Madoff’s main bank.

Madoff, 73, is serving a 150-year prison term. He pleaded guilty in March 2009 to running his Ponzi scheme.

The case is Picard v. Katz et al, U.S. District Court, Southern District of New York, No. 11-03605.

(Reporting by Grant McCool and Jonathan Stempel in New York; Editing by Robert MacMillan, Bernard Orr)

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LONDON (Reuters) – Former BP boss Tony Hayward has returned to the oil business with an agreement to acquire Turkish explorer Genel Energy via a reverse takeover to create a Kurdistan-focused group worth $4 billion.

Vallares, an investment vehicle set up by Hayward, financier Nat Rothschild and banker Julian Metherell, is buying Genel in a deal that exposes investors to political uncertainty over internal Iraqi politics and corporate governance concerns.

The enlarged group — which will likely be big enough to enter the FTSE 100 index of major British companies — will be known as Genel Energy Plc and Genel’s existing shareholders will own half of it, Vallares said on Wednesday.

Reuters reported news of the deal on Tuesday.

Kurdistan has enjoyed a surge of investment in the past year as relations between its regional government and Iraq’s national government in Baghdad improved. That has seen the central government lifting a bar on paying companies in Kurdistan for oil exported from the region.

Mehmet Karamehmet, one of Turkey’s richest men owns 56 percent of Genel, while chief executive Mehmet Sepil owns 29 percent.

On completion of the transaction, Hayward and Metherell will be awarded stakes in the group, each worth around $21 million, while Rothschild will receive a stake worth $210 million. Hayward will be CEO and Metherell will be finance director.

The founders could be in for additional payouts if the new venture is a successes, due to their entitlement to additional shares if the company’s shares rise above a threshold of 25 percent in the four years.

Hayward’s stake represents almost twice what he was paid for his three years as CEO of BP, which he left after the company’s blown-out Macondo well caused the U.S.’s worst ever offshore oil spill, and after he inflamed public opinion with a series of comments, including saying he would like his “life back.”

CORPORATE GOVERNANCE

The use of reverse takeovers to give fast-track London Stock Exchange listings to emerging market groups has been criticized for posing corporate governance risks and devaluing the cashe of an LSE listing.

Rothschild previously employed the technique with another vehicle, Vallar, which bought Indonesian coal assets to form Bumi Plc.

The choice of Genel as a partner is especially controversial since Sepil was given a record fine last year by Britain’s Financial Services Authority for insider dealing.

Two other executives were also fined in the case, which involved trading in shares of Heritage Oil, a partner in one of Genel’s fields.

Vallares chairman Rodney Chase said the Turkish side had since come up to speed on norms in the London market.

“The London governance framework has been embraced with complete enthusiasm,” he told reporters on a conference call.

While Iraq paid Genel and other operators in Kurdistan for oil produced in the first quarter, there is no final agreement on how oil revenues will be allocated and companies are awaiting payments for the second quarter.

Nonetheless, Hayward told reporters he looked forward to expanding in the region. “We expect to participate as a major player in any future consolidation in the region.”

The deal will see Vallares issue new shares worth $2.1 billion at 1,000 pence apiece.

(Editing by Dan Lalor)

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WASHINGTON (Reuters) – President Barack Obama, facing waning confidence among Americans in his economic stewardship, plans to lay out a $300 billion job-creation package on Thursday, CNN reported, citing Democratic sources.

The proposed new spending, to be announced by Obama in a nationally televised speech to Congress, would be offset by budget cuts, the report said, signaling that the Democratic president hopes to mollify the concerns of Republican fiscal hawks resistant to his jobs ideas.

There was no immediate comment from the White House.

Obama’s aides have refused to go public with the estimated cost of Obama’s package or provide many specifics in advance, except to say that the proposals will have a “quick and positive” impact on boosting jobs at a time of stubbornly high U.S. unemployment.

Confidence in Obama’s management of the economy has been hit by months of bad economic news and several polls on Tuesday showed fresh declines in his job approval ratings.

Obama hopes to start reversing this trend in an address to a joint session of Congress on Thursday, in which he will try to convince voters that he has a better economic recovery plan than his Republican opponents.

“We need to do things that will have a direct impact in the short-term to grow the economy and create jobs and the president will put forward proposals that will do just that,” White House spokesman Jay Carney said.

Obama fought Republicans all summer to lift the U.S. debt ceiling in a bitter debate that saw rating agency Standard & Poor’s cut the U.S. AAA credit rating, and he must now get lawmakers to back additional spending that many oppose.

However, the president is seeking congressional support at a time when his own prospects of re-election have worsened.

An NBC News/Wall Street Journal poll showed Obama’s job approval rating at a low of 44 percent, while an ABC News/ Washington Post poll found that six in 10 Americans now rate the president’s job on the economy and jobs negatively.

A third survey by Politico and George Washington University found that 72 percent of voters believe the country is either strongly or somewhat headed in the wrong direction, a jump of 12 percent since last May.

Obama must get unemployment down from levels currently above 9 percent to improve his chances of winning a second White House term in the November 2012 election.

The president has already touched on a various steps Congress could take to lift growth and hiring, including infrastructure spending, business tax breaks, and extending a payroll tax cut and aid for the long-term unemployed.

Carney declined to lay out any specifics but said the measures Obama would recommend would yield a “direct, quick and positive impact” on the U.S. economy if they were enacted by Congress.

Republicans criticized Obama for not including them in discussions on the package before his big speech and indicated any jobs bills could face tough passage through Congress, where they control the U.S. House of Representatives.

“I have no doubt the president will propose many things on Thursday that, when looked at individually, sound pretty good, or that he’ll call them all bipartisan. I’m equally certain that, taken as whole, they’ll represent more of the same failed approach,” said the top Senate Republican, Mitch McConnell.

Republican House leaders separately wrote to Obama urging him to repeal “excessive, job-destroying regulations” and laying out possible areas of common ground, including reforms to the unemployment system and free trade agreements.

(Reporting by Alister Bull, Laura MacInnis, Matt Spetalnick, Joanne Allen and David Morgan; editing by Cynthia Osterman)

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