Madoff figure’s request is rebuffed
Stanley Chais, the former Beverly Hills money manager under investigation for his role in the Bernard L. Madoff scandal, has more than enough money to hire a lawyer for himself, said a trustee in a Madoff liquidation case.
Marc Hirschfield, a lawyer for the trustee, responded Thursday to Chais’ claim that he can’t pay for a lawyer and has life-threatening medical problems that could compromise his ability to withstand a trial.
In a letter to a federal bankruptcy judge this week, Chais said he has a “serious problem” getting a lawyer because the government trustee has “effectively frozen” his assets in a lawsuit aimed at recouping more than $1 billion Chais collected from Madoff during the long-running Ponzi scheme.
Though sympathetic to Chais’ medical condition, Irving Picard, the trustee liquidating Madoff’s money management firm, contends that Chais has more than enough money to pay for his defense.
Chais funneled hundreds of millions of dollars to Madoff funds from Southern California investors, and his family withdrew “far more money” than they invested with Madoff, said Hirschfield, in a letter to Bankruptcy Court Judge Burton R. Lifland.
In a separate letter from his doctor, Chais also revealed that he has a serious blood disease that has worsened in the last year “to the point of becoming acute leukemia.” Chais, 82, told the judge that he has been undergoing chemotherapy treatments.
Chais has “profound anemia” that causes him “serious fatigue” and receives ongoing blood transfusions, according to the letter by Dr. Stephen D. Nimer of Memorial Sloan-Kettering Cancer Center in New York.
“Given the profound nature of the anemia and the disequilibrium he experiences following transfusions it is difficult to imagine he can participate fully in his legal defense,” Nimer wrote. “Furthermore, it is difficult to imagine he can fully concentrate during a trial. Hopefully, some compensation can be given to his life-threatening medical condition.”
The trustee is “very sensitive” to Chais’ health problems and won’t object to the release of money to cover his living and medical expenses, Hirschfield wrote. But Chais still can afford to defend himself, the lawyer said.
Chais’ Fifth Avenue apartment in Manhattan does not have a large mortgage, and his home in West Hollywood is on the market for $4 million, Hirschfield wrote. Allowing Chais to tap into his account at Goldman Sachs could dissipate assets that would otherwise go to Madoff victims, Hirschfield wrote.
Chais argued that the account, from which Picard has barred any withdrawals, is his only significant source of funds to pay for legal counsel.
“In the past several weeks, I have been accused of some terrible and untrue things,” Chais wrote to Lifland, saying, “of course, I want to defend myself and my family.”
In the so-called claw-back suit filed earlier this month, Picard alleged that Chais either knew or should have known about the fraud because of the sky-high investment earnings that allowed him and his family to withdraw more than $1 billion from Madoff funds.
Madoff pleaded guilty in March to running an epic scheme in which he paid off earlier investors with funds he solicited from newer investors. He is in prison awaiting sentencing in June.
The California attorney general’s office has launched a preliminary investigation into Chais’ role in funneling money into the Madoff scheme.
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