Thursday, 31 July 2014
Last updated 9 hours ago
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.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…