SAN FRANCISCO– Attorney General Kamala D. Harris today announced a $15 million settlement securing restitution for Californians who invested money with Beverly Hills-based investment adviser Stanley Chais, money that he then funneled into Bernard Madoff's notorious Ponzi scheme.
Chais was responsible for one of the largest operations channeling money directly to Bernard Madoff, violating California's consumer protection and corporate securities laws. He deceived his clients, many of whom were elderly, into paying him substantial fees, claiming he was actively managing their money while in actuality turning their investments over to Madoff. As a result, many lost their life savings when Madoff's fraudulent scheme was ultimately exposed in late 2008.
“For over 30 years, Stanley Chais unscrupulously defrauded Californians, many of them elderly, by taking their life savings, charging steep fees, and funneling their money to Bernie Madoff's elaborate Ponzi scheme,” said Attorney General Harris. “This settlement will help recover the losses suffered by victims who were cheated by Chais, many of whom lost everything.”
The settlement agreement, which was submitted today for approval in the United States Bankruptcy Court for the Southern District of New York, resolves litigation first filed by then Attorney General Edmund G. Brown Jr. against Stanley Chais in Los Angeles Superior Court over seven years ago.
Chais passed away in 2010 and all of his remaining assets, including his estate, will also be forfeited as part of a separate agreement that will be filed simultaneously by the court-appointed trustee for the liquidation of Madoff's investment firm.
Victims who are eligible for restitution will receive claim information at their last known address following approval of the settlement. In addition, individuals who invested money with Stanley Chais and have questions about whether they are eligible to receive restitution may also contact the restitution administrator at 888-369-8915.
Attorney General Harris has worked tirelessly to protect California consumers and hold accountable those who prey on innocent victims for profit.
In 2014, Attorney General Harris along Sonoma County District Attorney Jill Ravitch announced that Aldo Joseph Baccala, who ran a predatory Ponzi scheme that defrauded victims of more than $17 million, was sentenced to 20 years in state prison and ordered to pay a fine of $6.4 million.
In 2013, Attorney General Harris announced a 42-year prison sentence for James Koenig, a Northern California man who ran a Ponzi scheme that defrauded more than 400 investors, most of them elderly, out of more than $90 million.
In 2011, Attorney General Harris oversaw the case that found William Arthur Sassman II, the mastermind of a multi-million dollar Ponzi scheme, guilty of 13 felony counts of grand theft. Sassman was sentenced to 18 years in prison for stealing the life savings of dozens of investors to bankroll his lavish lifestyle and finance his own investments.
Copies of the First Amended Complaint and Settlement Agreement submitted to the bankruptcy court for approval are attached to the online version of this release atwww.oag.ca.gov/news.
Attorney General Kamala D. Harris / Friday, October 28, 2016