Stanley Chais, the Beverly Hills money manager and philanthropist who was caught up in the 2008 Bernard L. Madoff Ponzi scheme, died in Manhattan on Sept. 26. He was 84 and in recent years had suffered from a blood disorder.
Chais and his wife, Pamela, had homes in Beverly Hills and West Hollywood, and for the past few years resided in a New York apartment for proximity to medical treatment.
The Chais Family Foundation gave millions annually to causes in the United States, Israel and the former Soviet Union for nearly 25 years, but the foundation crumbled in 2008 when it lost its $178 million endowment in the Madoff scandal.
Madoff is currently serving a 150-year prison sentence for running a $65 billion Ponzi scheme, the largest in U.S. history.
The Securities and Exchange Commission filed a civil lawsuit against Chais in June 2009 alleging that Chais funneled more than $900 million in client funds to Madoff. Madoff and Chais were friends since the 1960s.
In past statements, Chais’ attorney, Eugene Licker of Loeb & Loeb in New York, asserted Chais’ innocence, saying he was a victim of Madoff’s fraud. Contacted upon Chais’ passing, Licker would only say Chais was a “kind, generous and philanthropic man. He will be missed.”
Many of Chais’ clients were from Jewish social circles, attracted by his stature and the 12 to 25 percent returns his funds unfailingly posted.
The State of California sued Chais in September 2009, and five other civil suits have been filed by investors in California, in addition to a suit filed in New York by the asset recovery trustees working on the Madoff case.
The suits allege that Chais misrepresented himself by telling clients he was investing their money, when he was actually handing it over to Madoff. Attorneys say he knew or should have known that Madoff was posting false returns.
The U.S. Attorney’s office in New York won a temporary stay of discovery on the SEC suit while it conducted its own investigation. No criminal charges were filed, and none can be filed against Chais now that he is deceased.
All of the cases, other than the SEC’s, were filed against the Chais estate and other defendants, including his family members, so those cases will proceed unchanged now that Chais has died. The SEC declined to comment on the status of the case.
Reached in December 2008 by The Jewish Journal, Chais said he, too, was betrayed by Madoff, and that he and his family personally lost a “huge amount of money.” Chais did not speak to the press after that.
Chais served on the board and was a major supporter of the Weizmann Institute of Science, the Hebrew University of Jerusalem and the Technion-Israel Institute of Technology.
Born in the Bronx in 1926, he also invested in more than 50 Israeli businesses, and he supported the American Jewish Joint Distribution Committee, United Jewish Communities (now Jewish Federations of North America) and the Avi Chai Fund.
In Los Angeles he contributed to the Jewish Community Foundation, The Jewish Federation, Childrens Hospital, Temple Emanuel and UCLA Hillel. He was an early supporter of LimmudLA.
Friends, investors and fellow philanthropists who knew Chais were shocked by the allegations against a man they saw as an upstanding philanthropist.
Jay Sanderson, president of The Jewish Federation of Greater Los Angeles, knew Chais for nearly two decades. Chais was a supporter of the Jewish Television Network, which Sanderson ran.
Sanderson said he does not know whether the allegations made against Chais are true, but he knows the man as someone who cared deeply about his causes.
“I always felt like Stanley Chais was a one-in-a-million person,” said Sanderson. “I always felt like there was no greater philanthropist in this country than Stanley, no one who cared more about Jewish life and Israel. He befriended me and he counseled me and he supported me in the work that I did.”
The crumbling of the Chais Family Foundation was particularly difficult for Chais, who was already in declining health when the Madoff scandal broke, Sanderson said.
“The experience devastated him because the things he loved to do most he wasn’t able to do. He wasn’t able to support the organizations he was involved in. I think he was deeply hurt about what happened and the impact it had on people and organizations,” Sanderson said.
Sanderson said he would like to see Chais’ legacy framed not just by this one issue.
“A man passes, you have to look at his whole life. I don’t know the truth of any of the allegations, and I’m not sure I want to know,” Sanderson said. “There are people who have fallen from grace who I have known who were not good people through their life. But Stanley was a good man. So I really don’t want to know about the situation surrounding Bernie Madoff. I want to remember him the way I knew him.”