State reaches $15-million settlement with estate of Beverly Hills money manager tied to Madoff
Californians who trusted their money to Beverly Hills investment manager Stanley Chais, only to have him funnel their money to Ponzi schemer Bernie Madoff, will get $15 million in restitution through a deal announced Friday.
Chais, who died at 84 in 2010, was accused of steering hundreds of millions of dollars from his investors — without their knowledge — to Madoff. Investors lost most of their money when Madoff’s seemingly successful investment business turned out to be a scam.
The California Department of Justice sued Chais in 2009, with then-Atty. Gen. Jerry Brown calling the money manager “nothing more than a Madoff middleman.”
The department, now led by state Atty. Gen. Kamala Harris, announced Friday that it had reached a settlement with Chais’ estate, calling for it to forfeit assets to pay restitution.
The settlement, which must be approved by a federal bankruptcy judge in New York, calls for the estate to pay $15 million. Eligible victims will be mailed information if the settlement is approved.
Chais was a longtime associate of Madoff’s but had maintained that he did not know Madoff was running a Ponzi scheme — an investment fraud in which money from new investors is used to pay back and inflate returns paid to previous investors.
The state Department of Justice argued that Chais must have known something was wrong and that Madoff was providing false financial statements. In the settlement agreement, Chais’ estate denies any knowledge of the scheme.
Madoff, 78, pleaded guilty in 2009 to multiple counts of fraud and is serving a 150-year prison sentence. Authorities have estimated that his Ponzi scheme totaled $65 billion, making it one of the largest and longest-running in U.S. history.
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