Beverly Hills money manager Stanley Chais accused of fraud
The Beverly Hills money manager kept investor funds flowing to Madoff and took profits and fees of $816 million, the suit says.
By Stuart Pfeifer and Claudia Eller
A key to the long-running success of Bernard L. Madoff's $65-billion Ponzi scheme was its secrecy and exclusivity. You had to know someone to get a piece of the action.
In Hollywood, that someone was often Beverly Hills money manager Stanley Chais, authorities say. On Monday, the Securities and Exchange Commission offered new details about how big a player regulators believe Chais was.
When the Ponzi scheme collapsed, Chais investors' accounts were valued at nearly $1 billion, authorities said. Although those accounts may now be worthless, Chais and his family took out nearly $546 million in ill-gotten profits from Madoff accounts from 1995 to 2008, the SEC said in a civil complaint.
On top of that, Chais collected nearly $270 million in fees from investors, the government said.
Madoff's misdeeds have been known for months, but the SEC lawsuit provided the most significant glimpse yet into the "feeder funds" that provided the new cash that allowed Madoff's operation to thrive.
Through his attorney, Chais denied wrongdoing and insisted that he too was a victim of the Madoff scheme.
Chais was prominent in Jewish philanthropy for decades.
To clients, he cast himself as an "investing wizard," never revealing that Madoff was actually pulling the strings, the complaint said. What's more, the SEC said that Chais knew, or was reckless in not knowing, that Madoff was running a Ponzi scheme.
From 1999 to 2008, for example, Madoff did not report a single loss on thousands of purported stock trades on Chais' accounts, "which should have made clear to Chais that Madoff's reports to Chais were false," the SEC said...more...
Not a single losing trade in all of his Madoff investments! The SEC has him cold. They want all the money back. Can they - will they - clawback from the charities and universities? Now that would be a classroom lesson for the ages.