UPDATE: Bayou’s Israel Gets 20 Years

Apr 14 2008 | 3:57pm ET

Samuel Israel, co-founder and CEO of collapsed hedge fund Bayou Group, was sentenced to 20 years in prison today for his role in the fraud that cost investors $450 million.

Rejecting pleas for clemency based on Israel’s health problems and cooperation with the government, U.S. District Judge Colleen McMahon—who Israel’s lawyers have accused of being prejudiced against their client—actually handed down the maximum sentence of 30 years. But she directed that Israel can serve his five year sentences for investor adviser fraud and conspiracy concurrently with his 20 year sentence for mail fraud. McMahon also order him to pay $300 million in restitution.

“I lied to you and cheated you and I cannot put into words how sorry I am,” Israel told investors at this morning’s hearing. He is set to report to jail on June 9; until then, he remains free on bail.

McMahon, who earlier this year sentenced Israel’s co-conspirators, former Bayou CFO Daniel Marino and co-founder James Marquez, to 20 years and four-and-a-half years, respectively.

Israel pleaded guilty to the fraud charges in September 2005.

The judge, who has taken a noticeably harsh tone at times when dealing with Israel, did not spare him her harsh tongue today, disposing of the arguments for mercy without pity.

“He suffered from these ailments while he did the crime,” McMahon said of Israel’s plea for leniency based on his nine back operations, painkiller addiction and pacemaker. “He can deal with them while he does that time.”

As for his cooperation with investigators, she was equally dismissive.

“After he was caught, he stopped lying,” she scoffed. “Good for him.”

RELATED STORIES

Bayou Group Head To Be Sentenced Today
Bayou CFO Sentenced To 20 Years For Fraud
Bayou Group Founder Gets Four Years


In Depth

The Benefits Of Private Debt Investing

May 7 2015 | 10:43am ET

Jeffrey Haas is chief operating officer of Old Hill Partners Inc., an SEC-registered...

Lifestyle

Yale Receives $150 Million Gift from Blackstone’s Schwarzman

May 12 2015 | 12:10am ET

Yale University announced it has received a $150 million gift from Blackstone Group...

Guest Contributor

How To Generate 6% Yield In A Volatile World

May 22 2015 | 6:41am ET

Private credit comes in many different flavors, all with the common themes of over...

 

Editor's Note