Legal News

Chais Fires Back at Picard; ?Inaccuracies, Half-Truths and Innuendos?

By Dionne Searcey

Ever heard of Stanley Chais? If you're one of the dozens of people who turned over collectively millions of dollars to him to invest, well, you’re probably pretty angry at him right now. Chais (pictured), a Los Angeles-based investment manager, invested all that money with Bernie Madoff.

Chais, 82 years old, ran an exclusive investment pool in California that attracted the likes of Oscar-winning screenwriter Eric Roth, who wrote “The Curious Case of Benjamin Button” among other Hollywood lesser-knowns. (Roth has since sued Chais.)

Last week, Irving Picard, the trustee liquidating Bernie Madoff's investment firm sued Chais in a scathing complaint accusing him and other defendants of collectively profiting from the Madoff scheme through the withdrawal of more than $1 billion. It says they “knew or should have known” that they were “reaping the benefits of manipulated purported returns, false documents and fictitious profits.”

On Monday, Chais fired back in a letter his lawyer emailed to at least one set of investors calling the accusations in the suit "inaccuracies, half-truths and innuendos."

"Notwithstanding the efforts by the Trustee to make it seem like I received preferential treatment, in the almost forty years I have been General Partner of the three partnerships, I have never received more that (sic) my allocable percentage of the partnership profits," Chais said in the letter.

"…The notion that I was ever aware of Madoff's Ponzi scheme is devoid of any common sense," Mr. Chais wrote. "Obviously if I knew, or even suspected, that it was all a fraud I would not have kept my money, my family's money, and my parent's money with Madoff."

According to the complaint filed last week, Chais's personal and business accounts showed yearly returns that were often in excess of 300 percent and with a combined average annual return of almost 40 percent, a rate Picard in the suit calls "implausibly high." Picard is trying to get the $1 billion back to be divvied up among all the Madoff investors.

Eugene Licker, an attorney for Chais, said the letter was Chais’s “heart-felt response to this nasty complaint.” He said last week that Chais “is saddened by the Trustee’s suit and outraged by the very public way in which the Trustee has proceeded, including suing Mr. Chais’s children and their spouses and referring to Chais’s grandchildren, none of whom had any decision making involvement in the investments.”

Full post as published by Law Blog - WSJ.com on May 06, 2009 (boomark / email).