Suit Says Investor Should Have Known of Madoff Fraud

Stanley Chais, an investment manager and prominent Los Angeles philanthropist, was sued on Friday by a court-appointed trustee who accused him of getting such outsized returns on his family’s accounts with Bernard L. Madoff that he “knew or should have known” that the family was participating in an illegal Ponzi scheme.

The complaint asserted that Mr. Chais was a primary beneficiary of the Ponzi scheme for at least 30 years, reaping annual returns on his family accounts that averaged 40 percent and were sometimes as high as 300 percent.

The various funds he ran for clients — who ranged from family friends to Hollywood aristocrats like Steven Spielberg and Jeffrey Trachtenberg — produced steady annual returns of 20 to 24 percent. That was about twice what most Madoff investors expected, although their funds were supposedly invested in the same way.