LOS ANGELES (CN) - California's Attorney General has sued Bernie Madoff's longtime friend Stanley Chais, accusing him of delivering hundreds of millions of investors' money to Madoff's Ponzi scheme. The state seeks at least $25 million in penalties, restitution and disgorgement.
Chais, who "fashioned himself as an 'investment wizard,' collected over $250 million in fees supposedly for exercising his skill and judgment in managing investments," Attorney Jerry Brown says in his lawsuit filed in Los Angeles Superior Court. "In fact, all Chais did was turn over the entirety of his investors' capital to Madoff without their knowledge."
From the '70s to December 2008, Chais served as one of the "largest feeder funds to Madoff, funneling hundreds of millions of dollars into Madoff's Ponzi scheme" as the general partner of three funds: the Brighton Co., the Lambeth Co. and the Popham Co., the lawsuit states. All three were given over to Madoff.
"Chais led these investors to believe that he was actively managing their investments and extracted astronomical fees - 25 percent of annual profits - for his services," according to the complaint. "While there is some variation, typically Chais's investors (were) not sophisticated and many were elderly."
Madoff was sentenced to 150 years in prison in June after pleading guilty to 11 felony counts and admitting to defrauding investors out of what prosecutors estimated to be $65 billion.
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