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Samuel Israel III

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For other people with the same name, see Samuel Israel.
Samuel Israel III
Born (1959-07-20) July 20, 1959 (age 65)
New Orleans, Louisiana, United States[citation needed]
Occupation(s)Former hedge fund manager and investment advisor
Criminal statusIncarcerated
Criminal chargeFraud
Penaltysentenced to 22 years

Samuel Israel III (born July 20, 1959)[1] is an American fraudster and former hedge fund manager for the Bayou Hedge Fund Group, which he founded in 1996. In 2008, Israel was sentenced to 20 years in prison and ordered to forfeit $300 million for defrauding his investors.

Early life and education

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Israel was born into a Jewish family of wealthy commodities traders.[2] He attended Hackley School in Tarrytown, New York.[3] He attended Tulane University but does not have a college degree.[4]

Career

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In 1996 Israel founded the Bayou Hedge Fund Group, which raised $450 million from its investors and for which Israel was CEO. Bayou and Israel misappropriated these funds for personal use, running what would later be revealed as a Ponzi scheme. After poor returns in 1998, the firm founded a dummy accounting firm, which they hired to audit themselves in order to keep up appearances to investors.[5]

In an attempt to recoup investing losses, Israel became embroiled in a series of highly speculative if not outright fraudulent schemes.[2] He gave a $10 million loan to Robert Booth Nichols, a self-described espionage agent who gave Israel as collateral a series of supposed bonds from a vast and secretive "shadow market". These and other schemes all were unsuccessful for Israel, who was also heavily abusing cocaine and dealing with a series of painful surgeries.[2]

The scheme was exposed after a series of investors grew suspicious and demanded their funds from Bayou only to be rebuffed.[2] On September 29, 2005 the Commodity Futures Trading Commission (CFTC) filed charges against Bayou, Israel, and Bayou CFO Daniel Marino.[6] The next year, the hedge fund filed for Chapter 11 bankruptcy-court protection.[7]

Manhunt and arrest

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Israel pled guilty and on April 14, 2008, was sentenced to 20 years in prison and ordered to forfeit $300 million to compensate victims.[8] He was allowed to remain free until being sent to prison, due to pre-existing medical issues that needed treatment.[2]

Israel failed to report to prison as ordered on June 9, 2008. His 2006 GMC Envoy was found abandoned on the Bear Mountain Bridge on June 10, 2008 with the phrase "Suicide is Painless" written in dust on the vehicle's hood. The phrase is the title of the theme song for both the movie and TV series M*A*S*H). Police suspected that this was an attempt by Israel to fake his own death in order to avoid prison.[9] The pair were featured on America's Most Wanted.[10]

Israel's girlfriend, Debra Ryan, was arrested later that same month for aiding and abetting his escape, and was released on bail. Ryan admitted to helping Israel escape, and also stated she and Israel parked an RV loaded with Israel's belongings near Bear Mountain Bridge on the day before his disappearance.[11]

Israel was eventually tracked down to a campground in Granville, Massachusetts, and surrendered to authorities on July 2, 2008.[12] As a consequence, he was further sentenced on July 15, 2009, to an additional two years in prison while his girlfriend was sentenced to three years' probation. [13] Israel is serving his sentence at Federal Correctional Institution, Butner Low in Butner, North Carolina. In 2019, he applied for early release, citing the First Step Act. This application was denied, and Israel's scheduled release date is May 10, 2026.[13]

Israel has cited onging chronic health problems in his bids for compassionate early release. His requests were denied in 2014 and 2019. Judge Colleen McMahon agreed in her 2019 ruling that Israel's health was poor, but she also said early release would "make a mockery of the sentencing statute" if Israel were released early, furthermore objecting to lenient sentencing for "white-collar criminals who have privileged backgrounds". [13]

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A Dateline segment about him aired on September 5, 2008.[14] Israel is the subject of the "Suicide is Painless" episode of American Greed on CNBC, first broadcast on February 3, 2010.[15]

In the 2023 Netflix documentary series Madoff: The Monster of Wall Street detailing the rise and fall of Bernie Madoff, the arrest of Israel is depicted as a precursor to the public uncovering of Madoff's multibillion-dollar Ponzi scheme.[16]

See also

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References

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  1. ^ Tavakoli, Janet M. (2009-01-06). Dear Mr. Buffett: What an Investor Learns 1,269 Miles from Wall Street. John Wiley & Sons. ISBN 978-0-470-44273-9.
  2. ^ a b c d e Guy Lawson (2012). Octopus: Sam Israel, the Secret Market, and Wall Street's Wildest Con. Crown Publishing, ISBN 0307716074.
  3. ^ Nelson D. Schwartz; Abha Bhattarai (14 June 2008). "The Search for a Missing Trader Goes Global". The New York Times. Retrieved 23 May 2016.
  4. ^ Murphy, Dennis (5 October 2008). "Mystery of the missing millionaire". NBC News. Retrieved 23 May 2016. But Sam the 3rd had never actually graduated from college.
  5. ^ Cantrell, Amanda (September 29, 2005). "Bayou founder, CFO plead guilty to fraud". CNN/Money.
  6. ^ "CFTC Press Release 5-21-05". Commodity Futures Trading Commission. 29 September 2005.
  7. ^ Brickley, Peg. "Bayou Investors Who Got Out Early Lose Their Bid for Pretrial Victory". WSJ. Wall Street Journal.
  8. ^ "Bayous Israel Gets 20-Year Term for Hedge Fund Fraud". Bloomberg.
  9. ^ "SUICIDE NOTE LEFT ON CONVICTED SWINDLER'S CAR ON BRIDGE - New York Post". 2008-09-21. Archived from the original on 2008-09-21. Retrieved 2022-08-01.
  10. ^ Samuel Israel - Fugitive, America's Most Wanted
  11. ^ Schwartz, Nelson D. (2008-06-20). "Fugitive Fund Manager's Girlfriend Is Charged". The New York Times. ISSN 0362-4331. Retrieved 2022-08-01.
  12. ^ "Fugitive Fund Manager Surrenders" (video). The New York Times. The New York Times. 2024-10-21. ISSN 0362-4331. Retrieved 2024-10-23.
  13. ^ a b c "Bayou hedge fund's Samuel Israel, who ran big Ponzi scheme, fails to win freedom". Reuters. 2022-07-12. Archived from the original on 2022-07-12. Retrieved 2022-08-01.
  14. ^ "Hedge-fund swindler Israel surrenders - U.S. business- msnbc.com". 2008-07-05. Archived from the original on 2008-07-05. Retrieved 2022-08-01.
  15. ^ "1 / 17 Suicide is Painless: The Fall of Samuel Israel III". CNBC. 27 January 2010. Retrieved 17 August 2016.
  16. ^ Madoff: The Monster of Wall Street. 2023. Retrieved 2023-02-16.
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