Judge Upholds $60M Restitution Order In Bayou Case

Aug 22 2011 | 2:02pm ET

A New York court has upheld a $60 million restitution order against a former Bayou Group employee for hiding a $500 million Ponzi scheme.

A Second Circuit three-judge panel rejected an appeal by Matthew Marino, brother of former Bayou CFO Daniel Marino. According to the web site Law360, Marino was the only real employee of a fictitious accounting firm (Richmond-Fairfield Associates) set up by Bayou to hide its fraud.

"In arguing that his conduct was not 'wantonly fraudulent,' appellant greatly understates his role in the Bayou fraud," Circuit Judge Ralph K. Winter wrote for the panel. "In essence, he asks us to ignore the importance of independent financial auditors as vouching to the investing public for the accuracy of a firm's books, and the importance of his role in vouching such accuracy to Bayou’s victim investors."

Marino’s lawyer argued that as his client had played a lesser role in the fraud, he should not have to pay restitution.

In April 2009, Marino, who pled guilty to misprision of a felony, was sentenced to 21 months by the U.S. District Judge Stephen Robinson, who also ordered the $60 million restitution.

Marino’s brother, Daniel, the so-called “linchpin” of the affair, received a 20-year prison sentence in 2008 after pleading guilty to conspiracy to commit investment adviser fraud, substantive investment adviser fraud, mail fraud and wire fraud.

Bayou collapsed in 2005, costing investors $450 million. Several of the firm’s executives, including founder Samuel Israel, were convicted of fraud; Israel, who spent several weeks on the run in the summer of 2008 after faking his suicide, was sentenced to 20 years.


In Depth

Q&A: Brevan Howard’s Charlotte Valeur Talks Strategy

Sep 18 2014 | 11:18am ET

Charlotte Valeur chairs the board of Brevan Howard Credit Catalysts, an LSE listed...

Lifestyle

Hedgies Rock Out For Children's Charity

Sep 15 2014 | 8:40am ET

It's that time of year again—when hedgies trade in their spreadsheets for guitars...

Guest Contributor

Volkered: How Financial Sector Reforms are Creating Opportunities for Hedge Funds

Sep 16 2014 | 11:28am ET

New regulations have dramatically curtailed proprietary trading activity in investment...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

September 2014 Cover

The London Whale: Rogue risk management

Credit default swaps brought down the London Whale and cost JPMorgan $6.2 billion. Here is how it happened.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.