Log In

Reset Password

Fed probes Californian investor in Madoff case

NEW YORK (AP) - A criminal probe of a prominent California investment manager parallels a civil investigation that concluded he fed nearly $1 billion of investor money to Bernard Madoff, earning a quarter billion dollars in fees along the way, prosecutors said Friday.

Prosecutors filed papers with a judge in US District Court in Manhattan asking that the civil case brought against investment adviser Stanley Chais by the Securities and Exchange Commission (SEC) be delayed six months while they determine whether to bring criminal charges.

Assistant US Attorney William Stellmach wrote that a criminal probe was looking at "very similar conduct" to what the SEC found when it concluded that Chais falsely told investors he was personally managing money in three funds when he just turned it over to Madoff.

The SEC also said Chais collected about $269 million in fees from the Chais funds between 1995 and 2008 while he provided false account statements to investors and asked Madoff to promise never to report losses from his trading, Stellmach noted. The SEC said Madoff reported in November 2008 that the Chais funds held more than $900 million in his accounts.

Eugene Licker, a lawyer for Chais, said the submission by prosecutors contains nothing beyond what the SEC had already alleged, "which Mr. Chais has denied".