Stanley Chais, a Beverly Hills, California investment advisor who operated “feeder funds” which collected money for the Madoff investment scandal, died yesterday in New York City of a blood disorder. He was 84.
Chais and his Chais Family Foundation donated extensively to organizations that preserve and further Jewish history and culture, including a significant number of Israeli organizations. The foundation had a huge footprint in the international Jewish world and their absence was keenly felt.
In Israel, Chais sat on the boards of the Technion, the Weizmann Institute and the Hebrew University of Jerusalem. The foundation, which had been funded through the Madoff scam, collapsed in December 2008.
The three funds that Chais operated offered returns of up to 25%. He told clients that he achieved the returns using a complex combination of derivatives, stock, currency and futures trading. Instead, the funds were merely funneled into Madoff’s Ponzi scheme.
On May 1, 2009 Irving Picard, bankruptcy trustee for Madoff Securities, filed a lawsuit against Stanley Chais. The complaint alleges he “knew or should have known” he was deep in a Ponzi scheme when his family investments with Madoff averaged 40% and sometimes soared as high as 300%. It also claims Chais was a primary beneficiary of the scheme for at least 30 years, allowing his family to withdraw more than $1 billion from their accounts since 1995 – money that belonged to Madoff victims.
On June 22, 2009, the SEC filed civil fraud charges against Chais. The U.S. attorney’s office persuaded a judge to issue a stay on the SEC lawsuit so that it could pursue a criminal investigation. No criminal charges were ever filed.
On September 23, 2009, California Attorney General Jerry Brown filed a lawsuit against Chais seeking $25 million in penalties and restitution for victims.