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

Financial Industry Blockchain Consortium R3 To Open-Source Platform Code

Oct 20 2016 | 9:03pm ET

Bitcoin's blockchain technology has spawned a flurry of activity among fintech startups...


Hedge Funds Swarm Into Palm Beach

Oct 27 2016 | 2:32pm ET

As the first flakes of snow fall on New York's northern suburbs, Dan Weil of South...

Guest Contributor

Hedge Fund Marketing – Tips for Your Initial Sales Meeting

Sep 29 2016 | 5:46pm ET

There are two main goals a hedge fund should have for an initial in-person sales...