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Suit names Madoff money manager
Question of the Day
NEW YORK | As the first speed dial entry at Bernard Madoff’s investment firm, longtime money manager and close friend Stanley Chais must have known about the disgraced financier’s multibillion-dollar Ponzi scheme, a complaint filed in Bankruptcy Court claims.
Mr. Chais insists he was a victim of Madoff. The swindle, he said, wiped out the Chais Family Foundation, which gave millions of dollars in annual contributions to various Jewish charges.
In a complaint filed Friday in Manhattan, court-appointed trustee Irving H. Picard said that Mr. Chais should be forced to forfeit the more than $1 billion he earned to help pay claims from thousands of victimized investors.
The complaint says that his family’s accounts earned wildly inflated returns - between 40 percent and 300 percent - since 1995 through Madoff. The trustee says the money was never actually invested in the market and that returns came from the pockets of more recent investors.
A lawyer for Mr. Chais said Friday he hadn’t seen the complaint, but he reiterated the claim that the Chais family had been victimized by Madoff, too.
“To the extent that the Trustee has alleged that Mr. Chais and his family received any kind of preferential or beneficial treatment from Madoff, it is important to understand that Mr. Chais and his family have suffered astounding and ruinous losses from the Madoff scheme,” the attorney, Eugene Licker, said in a statement.
Madoff, 70, pleaded guilty in March to charges that his secretive investment advisory operation was a multibillion-dollar fraud. The former Nasdaq Stock Market chairman faces up to 150 years in prison.
The claim “is the first of several actions that will be brought against entities that either acted as insiders with Bernard Madoff … or that benefited from Madoff’s scheme to the severe detriment of other customers of [Madoff’s firm],” David Sheehan, a lawyer representing Mr. Picard, said in a statement.
Accounts managed by Mr. Chais “received unrealistically high and consistent annual returns of between 20 and 24 percent,” the complaint said.
The complaint called those returns “implausible.” It also claimed that Mr. Chais and Madoff had a close relationship spanning decades.
“Chais’ telephone number is the first speed dial entry on a telephone list at [Madoff’s firm],” the complaint said. “He therefore enjoyed unusually intimate access to Madoff, allowing him an opportunity to gain special access to extensive information about the operations of [the firm].”
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