The Securities and Exchange Commission filed suit Monday against a New York company and four individuals, accusing them of feeding billions to Bernard Madoff’s Ponzi scheme.
The SEC charged Cohmad Securities Corporation as well as its chairman Maurice J. Cohn, COO Marcia B. Cohn, and registered representative Robert M. Jaffe, saying they “knowingly or recklessly” disregarded Madoff’s fraudulent conduct.
A separate complaint charged California investment adviser Stanley Chais, who oversaw three funds that invested all of their assets with Madoff. Chais investors lost nearly $1 billion.
Madoff and his brother Peter owned a combined 24 percent of Cohmad. The company and its top execs were accused of deceiving investors “by creating the false impression that investors would be admitted into the Madoff investment only as a special favor, and outside the normal retail brokerage work of Cohmad.”
They deliberately targeted unsophisticated investors, according to the complaint. Madoff allegedly instructed the Cohns to turn awayone who worked in the financial industry because they would ask “too many questions.”
Chais was one of the largest feeders of funds to Madoff’s operations. According to the complaint, “Despite having clear indications that Madoff was conducting a fraud, Chais persisted in distributing account statements to the funds’ investors based on Madoff’s purported returns, while charging the funds well over $250 million in fees for his purported ’services.’”
Madoff has pleaded guilty to felony charges and is scheduled to be sentenced on June 29. His accountant has also been charged.
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