Stanley Chais, the Beverly Hills money manager accused of being a Madoff fund feeder, was already the focus of a $250-million class action lawsuit. Friday, Chais was sued by the court-appointed trustee overseeing the liquition of Bernard L. Madoff investment Securities.
Chais is accused of, among other indiscretions, receiving such “implausibly high” returns that he did know, or should have known, he was involved in a massive Ponzi scheme.
From the NYT DealBook blog:
The complaint asserted that Mr. Chais was a primary beneficiary of the Ponzi scheme for at least 30 years, reaping annual returns on his family accounts that averaged 40 percent and were sometimes as high as 300 percent, The New York Times’ Diana B. Henriques reports.
The various funds he ran for clients — who ranged from family friends to Hollywood aristocrats like Steven Spielberg and Jeffrey Trachtenberg — produced annual returns of 20 to 24 percent, the complaint said.
That was still about twice what most Madoff investors expected.
The trustee, Irving H. Picard, was appointed at the request of federal regulators to recover money on behalf of those who invested with Mr. Madoff.
The suit marks the first time Mr. Picard has accused a supposed victim of the Madoff fraud of receiving special treatment, although he has sued other institutional investors under provisions of the federal bankruptcy code that allow him to challenge payments Mr. Madoff made in the final 90 days of his long-running fraud.
Reached later by an NYT reporter, Chais’ attorney said “it is important to understand that Mr. Chais and his family have suffered astounding and ruinous losses from the Madoff scheme.”
He added that Mr. Chais was “saddened by the trustee’s suit and outraged by the very public way in which the trustee has proceeded,” specifically by including Mr. Chais’s children and their spouses as defendants and referring to Mr. Chais’s grandchildren, “none of whom had any decision-making involvement in the investments,” he said.