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Philanthropist being sued as Madoff ‘middleman’

September 22, 2009

NEW YORK (JTA) -- California is suing a prominent Jewish philanthropist for being one of the primary conduits to Bernard Madoff’s Ponzi scheme.

Attorney General Edmund Brown Jr. filed suit Tuesday against financial manager Stanley Chais for concealing that his investment strategy consisted solely of giving tens of millions of dollars to Madoff, despite his claims that he had a diverse portfolio for his clients.

The suit seeks at least $25 million in civil penalties, restitution for Madoff’s victims and disgorgement of Chais’ profits.

"For decades, Stanley Chais posed as an investment wizard, but in truth he was nothing more than a Madoff middleman, channeling hundreds of millions of dollars in investor funds to his friend's Ponzi scheme," Brown said. "Chais intentionally concealed his close ties to Madoff while collecting nearly $270 million in fees."

The suit comes after a seven-month investigation into Chais’ Beverly Hills brokerage of Chais by Brown’s office that found a litany of violations of California state law.

In June, the U.S. Securities and Exchange Commission also filed suit against Chais alleging that he committed fraud by misrepresenting how he invested his fund’s assets and for distributing returns statements from Madoff that the SEC felt he should have known were falsified.

His Chais Family Foundation, which was wiped out when Madoff's scam came to light, gave approximately $12.5 million annually to Jewish causes.
 

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