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Bayou's boss sentenced to 20 years in prison
2008-04-14
A judge sentenced the co-founder of defunct hedge fund Bayou Group to 20 years in prison on Monday for his role in a scheme that cheated investors out of more than $400 million. Samuel Israel III, 48, pleaded guilty in September 2005 to charges of conspiracy and fraud in connection with bilking Bayou investors. The demise of Connecticut-based Bayou rocked the $1.8 trillion hedge fund industry and led to calls for more oversight. U.S. District Judge Colleen McMahon ordered Israel to surrender on June 9 to begin serving the prison sentence. She also said Israel must pay $300 million in restitution. The sentence is one of the longest ever handed down to a white-collar criminal defendant. The punishment in this case was particularly severe because federal sentencing guidelines call for long sentences when there are substantial economic losses to investors in a financial fraud. Former Adelphia Communications Corp finance chief Timothy Rigas is serving a 20-year prison term; former WorldCom chief executive Bernard Ebbers received a 25-year sentence and ex-Enron CEO Jeffrey Skilling got 24 years. Judge McMahon said that, under federal sentencing guidelines, she could have sentenced Israel to 30 years. But said she was persuaded during the sentencing proceeding to cut it to 20, citing the government's statements that Israel had cooperated with its probe. Israel and his co-defendants, former Bayou Chief Financial Officer Daniel Marino and co-founder James Marquez, admitted that, beginning in 1996, they lied to customers about their funds' profits and losses, fabricated audits and financial statements, and created a brokerage that while executing money-losing trades for clients generated millions in commission for themselves. Marino received 20 years in prison. Marquez, who left the fund in 2001, was held less responsible for the long-term fraud and sentenced to four years and three months. (Reporting by Leslie Gevirtz and Martha Graybow; Editing by Andre Grenon)
Stage set for Madoff plea in New York court drama (2009-03-11)Madoff investors prepare for court confrontation (2009-03-08)Bayou's boss sentenced to 20 years in prison (2008-04-14)Court overturns conviction of ex-Qwest chief (2008-03-17)Ex-Enron CEO Skilling reports to prison (2006-12-13)
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