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JewishJournal.com

September 22, 2009

California attorney general to sue Stanley Chais

http://www.jewishjournal.com/blog/item/california_attorney_general_to_sue_stanley_chais_20090922/

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Stanley Chais can’t catch a break.

California Attorney General Jerry Brown will hold a press conference downtown in about 75 minutes to announce that he’s suing the former Beverly Hills investment guru for directing “hundreds of millions of dollars in clients’ investments to Bernard Madoff, while actively concealing the link between the two.”

Brown jumped the gun last night, writing at the Huffington Post:

For his so-called expertise, Chais charged his clients a whopping 25 percent of their annual profits—pocketing some $270 million over the decades—and he was careful to conceal his connection with Madoff. So when Madoff’s empire collapsed late last year, Chais’s clients were shocked to find that their life savings had vanished virtually overnight.

When this information came to light, investigators from the California attorney general’s office jumped in immediately. Seven months later, we are now able to file legal action in Los Angeles Superior Court against Chais for securities fraud, unfair business practices and making misleading statements. The suit seeks an injunction, restitution for victims, disgorgement of profits and at least $25 million in civil penalties.

Sadly, the rise of super-sized swindlers like Madoff and Chais was inevitable given the mindless deregulation-mania of the last decade—abetted and made possible by a complicit Congress, SEC, and inattentive White House.

There were clear warning signs. Chais had only three months of negative returns between 1996 and 2007. Madoff’s balance sheet did not reflect the normal fluctuations of the market, nor did he report a loss on a single trade made on behalf of the Chais funds between 1999 and 2008.

But regulators and federal officials were lulled to sleep by a pervasive ideology that private vice on Wall Street would always be transmogrified into public virtue. America is paying the price for this noxious doctrine in unprecedented job losses and an avalanche of foreclosures.

Let’s not wait for the next Chais or Madoff to be exposed.

Read the rest here.

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