September 22, 2009 / 5:26 PM / 8 years ago

California sues Madoff "middleman" Chais for fraud

<p>Bernard Madoff walks back to his apartment in New York in this December 17, 2008 file photo.Shannon Stapleton/Files</p>

LOS ANGELES (Reuters) - California's attorney-general sued Los Angeles money manager Stanley Chais on Tuesday, accusing the celebrity fund manager of funneling money into Bernard Madoff's $65 billion Ponzi scheme.

California Attorney General Jerry Brown filed a securities fraud lawsuit against Beverly Hills investment adviser Chais, accusing him of channeling hundreds of millions of dollars over about three decades into Madoff's fraudulent funds.

The lawsuit comes after the U.S. Securities and Exchange Commission had also filed suit against Chais, known for handling investments for Hollywood's elite -- including film director Steven Spielberg.

Chais and his lawyers were not available for comment on Tuesday. His attorneys said in June that Chais too was a victim of Madoff's fraud.

But Brown's office accused Chais -- which it described as a middleman for Madoff -- of actively disguising his link with the disgraced asset manager.

Chais made more than $270 million in fees, charged 25 percent fees on profits and claimed to make 20 percent to 25 percent returns on investments, Brown's office said.

The lawsuit seeks at least $25 million in civil penalties and an injunction against Chais.

In May, the U.S. bankruptcy court trustee handling the liquidation of Madoff's investment firm also sued Chais and members of his family for the return of $1 billion of investors' funds.

Reporting by Edwin Chan and Peter Henderson; Editing by Richard Chang

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