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.”


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

In Depth

Related-Company Fees: Normal Industry Practice or Conflicted Compensation?

Nov 11 2015 | 4:23pm ET

Regulatory agencies as well as investors are increasingly exploring whether certain...


Ferrari Roars in Wall Street Debut

Oct 21 2015 | 4:28pm ET

Shares of supercar maker Ferrari jumped as much as 15 percent to a high of nearly...

Guest Contributor

Private Debt - What is the Opportunity?

Nov 11 2015 | 3:28pm ET

In this contributed article, Rob Allard, founding partner of Firebreak Capital...


Editor's Note

    Oct 21 2015 | 10:41am ET

    One of the most unique charity benefits in the hedge fund industry, A Leg To Stand On's (ALTSO's) Hedge Fund Rocktoberfest - NYC, raised nearly $500,000 last Thursday thanks to the generous support of major sponsors and nearly 1,400 attendees from the Tri-State finance, business and hedge fund communities. Read more…