US federal regulators have filed securities fraud charges against a prominent California investment adviser and a New York brokerage firm said to be secretly controlled by Bernard Madoff, accusing them of funnelling billions of dollars from investors into Madoff's pyramid scheme.
The Securities and Exchange Commission on Monday announced civil fraud charges against New York-based Cohmad Securities Corporation its chairman, Maurice "Sonny" Cohn, his daughter, chief operating officer Marcia Cohn, and vice president and broker Robert Jaffe.
Named in a second SEC lawsuit was investment adviser Stanley Chais, a long-time Beverly Hills philanthropist, who allegedly oversaw three funds that invested all of their assets - nearly $US1 billion ($A1.27 billion) - with Madoff.
While channelling billions in investor funds to Madoff, the associates together collected several hundred million dollars in fees from the now-disgraced money manager, the SEC alleged.
They were crucial to the success of Madoff's $US50 billion ($A63.59 billion) fraud scheme, targeting affluent yet financially unsophisticated investors by burnishing the impression that one could only get in as an investor with Madoff with special access and as a favour, the regulators said.
Cohmad and Chais were said to have gained nearly all their revenue from introducing investors to Madoff in a well-oiled marketing operation.
The SEC move widened the circle of players around Madoff who have been charged by the government in what may be one of the biggest investment frauds in history, spreading out from Madoff himself and his longtime accountant, who was arrested in March on criminal fraud charges.
Jaffe and Chais, through their lawyers, disputed the SEC's allegations.
Madoff co-owned and secretly controlled Cohmad and used it to procure a steady stream of funds for his multibillion-dollar fraud, the SEC said.
Cohmad's main office was in the Lipstick Building on Manhattan's Third Avenue - the same address as Madoff's investment and securities brokerage firms.
The agency's lawsuits were filed in federal court in Manhattan.
One accuses Cohmad, the Cohns and Jaffe of actively marketing Madoff's funds to prospective investors "while knowingly or recklessly disregarding" facts that indicated he was running a fraud.
A second suit alleges that Chais committed fraud by misrepresenting his role in managing the three funds' assets and providing account statements to investors that he should have known were false.
The SEC is seeking injunctions against the defendants as well as unspecified civil fines and restitution of allegedly ill-gotten profits.
Madoff, 71, has been jailed since March, when he pleaded guilty to securities fraud, perjury and other charges.
He admitted stealing billions of dollars from some investors to pay fraudulent profits to others.
He faces up to 150 years in prison and is scheduled to be sentenced next week in Manhattan federal court.
The thousands of investors who lost money included ordinary people, Hollywood celebrities and scores of famous names in business and sports - as well as big hedge funds, international banks and charities in the US, Europe and Asia.
AP
