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Business

Madoff pal sues for funds

By
Paul Tharp
Published Nov. 14, 2009, 5:00 a.m. ET

Investor and philanthropist Stanley Chais is escalating his legal fight to unfreeze $1 billion of his cash that is being claimed for victims of Bernie Madoff’s Ponzi scheme.

In legal filings yesterday, Chais counter-sued Irving Picard, the trustee overseeing the liquidation of Madoff’s assets, claiming Picard lied to and threatened Goldman Sachs to get the bank to freeze Chais’ accounts.

Picard first sued the Madoff crony six months ago, claiming Chais illegally withdrew $1 billion from Madoff’s criminal scheme ahead of others, parking the money at Goldman.

Chais’ lawyer is claiming that Picard used false pretenses in a letter to Goldman to grab Chais’ assets.

“The statements and legal conclusions put forth in the letter are patently untrue and the scant legal authority cited is entirely misrepresented,” said Eugene Licker, the lawyer for Chais.

Picard has targeted a total of about $15 billion that investors withdrew from Madoff’s scheme before it imploded.

Chais, 83, has homes in New York and Los Angeles. He said his entire family was wiped out by the $1 billion freeze, and needed cash for his legal fight.

Picard countered that Chais should sell his Fifth Avenue home to pay legal bills, which Chais rejected.

Bankruptcy Judge Burton Lifland earlier said Chais and his wife, Pamela, could draw down no more than $50,000 in legal fees and $100,000 in other expenses.