The life and death of Stanley Chais: Plus Ruth Madoff Spotted
Stanley Chais was a Beverly Hills, California investment advisor who operated feeder funds which allocated capital to Madoff funds. He passed away on September 26, 2010 from a rare blood disease at the age of 84.
The Chais death is the third major death surrounding the Madoff scandal. The first was investor’s Rene-Thierry Magon de la Villehuchet’s suicide and the second being the death of Jeffry Picower (see previous post regarding Picower).
Chais was accused in a pending Securities and Exchange Commission lawsuit of feeding about $1 billion — virtually all the funds he collected from investors — into Madoff’s multibillion Ponzi scheme. Specifically Chais managed three funds which invested with Madoff: 1) the Lambeth Company, 2) the Brighton Company and the 3) Popham Company. Although he withdrew $500 million before the collapse of the Madoff funds, Chais maintained that he was also a victim and was not complicit. Here is the SEC complaint against Chais.
Chais also facing a lawsuit from the Madoff trustee, Irving Picard which was filed on May 1, 2009 Irving Picard, bankruptcy trustee for Madoff Securities, filed a lawsuit against Stanley Chais. The complaint alleges he “knew or should have known” he was deep in a Ponzi scheme when his family investments with Madoff averaged 40% and
sometimes soared as high as 300%. It also claims Chais was a primary beneficiary of the scheme for at least 30 years, allowing his family to withdraw more than $1 billion from their accounts since 1995 – money that belonged to Madoff victims. The Picard complaint is here.
Chais was also facing a lawsuit from filed on September 23, 2009, California Attorney General Jerry Brown seeking $25 million in penalties and restitution for victims.
Chais was a large philanthropist and his philanthrophy, the Chais Family Foundation, closed in December 2008 as a result of losses associated with Madoff.
Here is a video from CNBC about the Chais death:
In other Madoff news, Bernard Madoff’s wife Ruth Madoff has been spotted in New York City at Midtown’s Le Pain Quotidien. Here’s the video:
Ruth Madoff had a new red harido (previously her hair was blond). Ms. Madoff was so dedicated to her previous blond hairstyle that she visited her salon, Pierre Michel, every six weeks for the last 10 years. After the Madoff scandal broker she was told that she could no longer enjoy her routine of sitting with a glass of Poland Spring water while Giselle, a colorist often cited in Vogue and Allure, wielded the foils. “Oh my g-d,” Madoff uttered, as ABC News advanced towards her. This video also features Madoff victims advocate Ronnie Sue Ambrosino. By the way the a website for the Madoff victim’s network is: http://bernardmadoffvictims.org. When Ruth Madoff was asked if she had any words regarding her husband’s victims, she said nothing. Perhaps it makes sense she’s keeping mum, since no one knows what federal prosecutors may or may not be up to….
Arthur Nadel’s Future Freedom? – Ponzi Pathology or Pathos
Arthur Nadel is back in the news. He is approaching the sentencing phase. As a reminder Arthur Nadel a Florida hedge fund manager who, to refresh memories, pulled a Sam Israel and disappeared a little over a year ago just as he was due to pay investors $50 million. Here is a video about Mr. Nadel’s time on the run:
Here is a link to our previous post on Mr. Nadel. He later surrendered to authorities in January 2009. Nadel has finally admitted to perpetrating the $168 million fraud. His attorneys say the former Sarasota hedge-fund operator is in poor health and might not survive a longer stretch in a federal prison.
These sentences are on top of other lawsuits including one filed by six victims in the Arthur Nadel (Scoop Management, Inc.) scandal have filed a $2.3 million lawsuit against newsletter editor and publisher (Don Rowe) . Nadel’s Scoop managed six private investment funds.
His attorney’s also argue that the criminal conduct of Nadel, 77, was not an effort to live a lavish lifestyle, unlike his partners, Neil and Christopher Moody.Neil and Christopher have denied any wrongdoing as outlined in my previous post.
“Mr. Nadel’s conduct, although reprehensible, was not motivated by greed but by his pathological desire for admiration and his inability to face and admit to others that he was a failure,” his attorneys said.
If Nadel were to be sentenced to five years — and get credit for his 20 months of detention in the Metropolitan Correctional Center (where Bernard Madoff spent some time) — he could be back in Sarasota in less than 31/2 years.
But there are significant hurdles to that future. Prosecutors are seeking a much stiffer sentence. They believe Nadel is eligible for nearly 22 years, and may submit their own sentencing recommendations this week.
Investors who earlier filed victim-impact statements have urged U.S. District Judge John G. Koeltl to lock up Nadel for the rest of his life. He is scheduled to be sentenced Oct. 8 in New York for orchestrating a Ponzi scheme that cost investors $168 million in out-of-pocket losses. He pleaded guilty in February to 15 federal fraud counts. It will be interesting to see if the court complies with Nadel’s pleas or delivers a stiff sentence….
A Bet Against the American Dream? – The Magnetar Trade – You Judge
Here is a video put together by National Public Radio’s Planet Money featuring a show tune about the so-called Magnetar Trade which involved the housing market and Collateralized debt obligations (“CDO’s”) (and Magnetar’s response to it):
Understanding a hedge funds trading strategy, the nature of any particularly large bets and the potential publicity (positive or negative) that may be associated with such trades is all an important part of the initial and on-going hedge fund operational due diligence process. Incidentally, a magnetar is a type of star (neuron) with a very strong magnetic field whose decay emits high energy electromagnetic radiation including gamma rays (which created the Incredible Hulk). Did this trade have a similar decaying effect on fueling the economic meltdown in America – you decide…
