June 22, 2009 | 1:51 pm

SEC sues Stanley Chais and four others

Posted by Brad A. Greenberg

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Stanley Chais, the 83-year-old Beverly Hills investor manager, keeps getting bad news. Last month he was sued by the court-appointed trustee liquidating Bernard Madoff’s bogus investment company; the trustee, Irving Picard, claimed Chais “knew or should have known that they were reaping the benefits of manipulated purported returns, false documents and fictitious profits.”

Today the Securities and Exchange Commission followed suit with a its own civil lawsuit (PDF) claiming Chais and four others willfully participated in the biggest Ponzi scheme in U.S. history:

In a complaint filed in federal court in Manhattan, the Securities and Exchange Commission claimed that Cohmad Securities Corporation; its chairman, Maurice J. Cohn; his daughter and the firm’s chief operating officer, Marcia Beth Cohn; and a broker at the firm, Robert M. Jaffe; actively marketing Madoff investments while “knowingly or recklessly disregarding facts indicating that Madoff was operating a fraud.”

In a separate civil complaint in the same court, the regulators filed similar charges against Mr. Chais, an investment adviser and prominent philanthropist who oversaw three funds that invested all of their assets with Mr. Madoff. When the Ponzi scheme collapsed, the Chais investors’ accounts were valued at nearly $1 billion.

The S.E.C. complaint against Mr. Chais echoed a complaint filed by Irving H. Picard, the trustee pursuing assets for Mr. Madoff’s victims. Within moments of the announcement of the regulatory cases, Mr. Picard also sued Cohmad, mirroring claims made in Monday’s S.E.C. complaint.

Read the rest here.

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