Brown sues Beverly Hills money manager
Jerry Brown (D)
SACRAMENTO, Calif. (Legal Newsline)-California Attorney General Jerry Brown filed a securities fraud lawsuit on Tuesday against Beverly Hills investment advisor Stanley Chais.
Chais is accused of funneling hundreds of millions of dollars into convicted money manager Bernard Madoff's Ponzi scheme.
The lawsuit, which was filed in Los Angeles County Superior Court, is seeking $25 million in civil penalties.
Chais, 82, had hundreds of investors whom he had allegedly promised high returns at the same time charging them $270 million in fees, Brown said in a statement.
Brown called Chais a middleman who hid his ties to Madoff from the 1970's until last December -- the whole time directing funds into three fraudulent investment funds.
The U.S. Securities and Exchange Commission filed civil fraud charges earlier this year against Chais in New York.
Chais' attorney, Eugene Licker, said in a statement that said Chais was unaware that Madoff was operating a Ponzi scheme.
"The claims that Mr. Chais misrepresented himself or the investments, that he lured unsuspecting investors, and that he in any way misled investors are simply untrue," Licker said. "Although it is understandable that certain disappointed and now-desperate investors would seek to point the finger at someone to try to recoup some of their losses, that does not condone making reckless and baseless allegations."