Money man­ager who in­vested with Mad­off

STAN­LEY CHAIS, 1926 - 2010

Los Angeles Times - - Late Extra - Stu­art Pfeifer and David Sarno

Stan­ley Chais, the Bev­erly Hills money man­ager whose clients lost hun­dreds of mil­lions of dol­lars in the no­to­ri­ous Wall Street in­vest­ment scam run by Bernard L. Mad­off, died Sun­day in New York. He was 84.

Chais, who was fac­ing a law­suit by the Se­cu­ri­ties and Ex­change Com­mis­sion and was un­der crim­i­nal in­ves­ti­ga­tion by fed­eral pros­e­cu­tors in New York, died at an undis­closed lo­ca­tion in Man­hat­tan, said Ellen Bo­rakove, spokes­woman for the New York City chief med­i­cal ex­am­iner. No cause was given, but Chais had been suf­fer­ing from a rare blood dis­ease.

Be­fore the Mad­off scan­dal broke in 2008, Chais was a re­spected fi­nancier and phi­lan­thropist who had do­nated mil­lions to dozens of Jewish char­i­ties in the U.S. and Is­rael. He was par­tic­u­larly gen­er­ous to ed­u­ca­tional in­sti­tu­tions, pro­vid­ing fund­ing for pro­grams to aid chil­dren with learn­ing dis­abil­i­ties, among many other causes.

But the char­i­ta­ble or­ga­ni­za­tion Chais ran with his wife, play­wright and screen­writer Pamela Chais, col­lapsed along with Mad­off’s scheme.

Mad­off pleaded guilty in 2009 to 11 fed­eral crimes and ad­mit­ted that he had turned his wealth man­age­ment busi­ness into the largest Ponzi scheme in U.S. his­tory, bilk­ing thou­sands of in­vestors of bil­lions of dol­lars.

Born in the Bronx in 1926, Chais served on the boards of a num­ber of Is­raeli schools and uni­ver­si­ties, in­clud­ing the Weiz­mann In­sti­tute of Sci­ence, the He­brew Uni­ver­sity of Jerusalem and the Tech­nion-Is­rael In­sti­tute of Technology, of­ten likened to MIT. He held hon­orary de­grees from many of those in­sti­tu­tions.

He also poured money into more than 50 Is­raeli busi­nesses, ac­cord­ing to on­line bi­ogra­phies posted by Jewish groups with which he has been af­fil­i­ated.

In 2009, the SEC filed civil charges against Chais, al­leg­ing that he had steered hun­dreds of mil­lions of dol­lars from in­vestors to Mad­off,

gen­er­at­ing some $270 mil­lion in fees, and that he knew Mad­off was op­er­at­ing a Ponzi scheme. When the scheme col­lapsed in 2008, Chais’ books showed that his clients had bal­ances of more than $900 mil­lion — in­clud­ing Mad­off’s fic­ti­tious re­turns, ac­cord­ing to the SEC.

The U.S. at­tor­ney’s of­fice in Man­hat­tan per­suaded a judge to is­sue a stay on the SEC law­suit so it could pur­sue a crim­i­nal in­ves­ti­ga­tion. But no crim­i­nal charges were ever filed. In June, a judge sus­pended ac­tiv­ity in the law­suit un­til De­cem­ber of this year.

The SEC had ac­cused Chais of telling clients that he was in­vest­ing the money him­self, but in­stead giv­ing it all to Mad­off. The two fi­nanciers had a re­la­tion­ship go­ing back 30 years.

Soon af­ter the scan­dal broke, Chais moved to Man­hat­tan, cit­ing a need for med­i­cal treat­ment. Be­fore that, he and his wife had lived in Bev­erly Hills and West Hollywood.

In an in­ter­view this month, Pamela Chais said that her hus­band was ex­tremely ill and that he was re­ceiv­ing reg­u­lar dial­y­sis treat­ment.

“My hus­band is in very bad health,” she said at the time, from the cou­ple‘s Man­hat­tan apart­ment. “I spend most of my time be­tween the apart­ment, tak­ing care of it, and the hos­pi­tal. It’s a night­mare for him and me. Thank God we love each other.”

In 2009, Dr. Stephen D. Nimer of New York’s Me­mo­rial Sloan-Ket­ter­ing Can­cer Cen­ter wrote a let­ter to a fed­eral bank­ruptcy court in­volved in the Mad­off af­fair, say­ing Chais had “pro­found ane­mia” that caused him “se­ri­ous fa­tigue.”

The let­ter said Chais was re­ceiv­ing on­go­ing blood trans­fu­sions.

Chais’ at­tor­ney, Eu­gene Licker, has main­tained that Chais had no idea that Mad­off was op­er­at­ing a Ponzi scheme.

“Mr. Chais and his fam­ily were ma­jor vic­tims of the Mad­off fraud,” Licker said in a state­ment in 2009. “The no­tion that he was com­plicit in it is out­ra­geous.”

Licker did not re­spond to an e-mail re­quest­ing com­ment about his client’s death.

To date, six peo­ple — Mad­off and five em­ploy­ees — have been pros­e­cuted in con­nec­tion with Mad­off’s fraud.

None of the in­vest­ment ad­vi­sors who fun­neled money to Mad­off face crim­i­nal charges; Chais was the only ad­vi­sor whom pros­e­cu­tors had iden­ti­fied as a sub­ject of a crim­i­nal in­ves­ti­ga­tion.

Robert Chew, a Los An­ge­les mar­ket­ing con­sul­tant, said he in­vested $700,000 with Chais, only to lose it all. He called Mad­off’s scheme “fi­nan­cial mass murder.”

A list of Chais’ sur­vivors in ad­di­tion to his wife was not avail­able.

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