Chais Accounts Temporarily Blocked in Madoff Suit
By Erik Larson, Bloomberg.com
Stanley Chais, the philanthropist sued for $1 billion for profiting from Bernard Madoff’s fraud, has been temporarily restricted from using his money while a liquidator seeks to prove the cash belongs to victims.
A temporary restraining order, signed yesterday by U.S. Bankruptcy Judge Burton Lifland in New York, runs through Oct. 22 and may be extended. Irving Picard, who sued Chais and is liquidating Madoff’s business, ultimately seeks an injunction blocking the bank accounts for a longer period.
The order permits the 83-year-old Chais and his wife, Pamela, with homes in New York and Los Angeles, to spend as much as $50,000 on legal fees and $50,000 on other expenses. Chais hasn’t said how much money is in the accounts and didn’t challenge the restrictions.
“The source of the money is irrelevant,” Chais’s lawyer, Eugene Licker, said today in a phone interview. “The money belongs to Stanley and Pamela Chais. Mr. Picard thinks he’s going to win, and while reasonable people can disagree with that, until he wins it isn’t his money.”
Chais agreed to give Picard new evidence about the disputed accounts at Goldman Sachs Group Inc. and City National Bank. Chais claims that he and his family were wiped out by Madoff’s fraud, and that Picard wrongfully cut off access to the Goldman Sachs account by earlier threatening to “go after” the New York-based bank if it released the funds.
Clawback Suits
Picard wants the cash preserved to repay investors if he wins his lawsuit against Chais, who was one of Madoff’s biggest investors. The lawsuit is among more than a dozen “clawback” cases seeking the return of as much as $15 billion in fake profit from Madoff’s family members, offshore hedge funds and feeder funds that directed investors’ money to the scheme.
Madoff, 71, is serving a 150-year sentence for running the $65 billion Ponzi scheme. Chais invested with the con man since at least the 1970s, making him and the entities he controlled some of the biggest beneficiaries of the fraud, Picard claims.
The case is Picard v. Chais, 09-01172, and the bankruptcy case is In re Bernard L. Madoff, 09-11893, U.S. Bankruptcy Court, Southern District of New York (Manhattan).