The SEC alleges Chais created three funds and earned nearly $270 million in commission fees from 1995 to 2008.
"The Complaint filed today by the SEC paints a distorted and false picture of Stanley Chais, borrowing liberally from baseless allegations by private plaintiffs trying to benefit themselves. Like so many others, Mr. Chais was blindsided and victimized by Bernard Madoff's unprecedented and pervasive fraud," according to a statement released by Chais' lawyer.
Court documents allege in the mid-1990s Chais told Madoff that "he did not want there to be any losses in any of the Funds' trades."
"Between 1999 and 2008, despite purportedly executing thousands of trades on behalf of the funds, Madoff did not report a loss on a single equities trade," according to the complaint.
Chais deposited approximately $12 million into his funds while withdrawing more than $355 million since 1995, according to the court documents.
A lawyer for Chais said his family has lost everything, "an impossible result were he involved in the underlying fraud."