As we wrote earlier today, Attorney General Jerry Brown has decided to go after every financial fraud he can.
Today, he filed a lawsuit against “Madoff middleman” Stanley Chais, who pocketed $270 million over the decades by feeding money to Bernie Madoff, while concealing the link between the two.
Good timing for Brown- who is said to be running for governor- but let’s note that Chais operated his funds from the 1970s to 2008.
He attracted hundreds of investors by producing annual returns of 20 to 25 per cent over the years, which, just there, hmmm….should’ve raised suspicions?
Chais hid behind a “I use prop trading” and “have sophisticated brokers in New York” arguments to cover the fraud.
Brown said in a statement that “investors were discouraged from asking about his investment strategy and were led to believe that he utilized a complex and diversified approach involving arbitrage, derivatives, stock, currency and futures trading.”
What Chais did instead, is turn all the money to Madoff, who, gracefully returned the favour by producing made-to-order returns. And he charged his investors a 25 per cent fee on profits.
Business Insider Emails & Alerts
Site highlights each day to your inbox.