The Securities and Exchange Commission announced the civil charges Monday. Federal regulators accuse Cohmad Securities chairman, Maurice Cohn, chief operating officer Marcia Cohn, broker Robert Jaffe and a California-based investment adviser, Stanley Chais, of turning a blind eye to "suspicious practices that clearly indicated" Madoff was scamming investors using a money pyramid scheme.
Madoff helped set up Cohmad Securities, which was a mysterious side company that Robert Khuzami Director of the SEC's Division of Enforcement said Madoff needed to maintain a "constant in-flow" of cash "to sustain his fraud." As a result, Cohmad brought in more than 800 accounts worth billions of dollars.
The SEC also alleges that Jaffe received "outsized returns" to his personal accounts which he knew or should have been were fictitious.