Bayou CFO Draws 20-year Jail Term

January 30, 2008 (PLANSPONSOR.COM) - The former chief financial officer for a Stamford, Connecticut-based hedge fund that collapsed in 2005 has been slapped with a 20-year jail term for his role in what prosecutors charged was a $400 million fraud scheme.

U.S. District Judge Colleen McMahon handed down the sentence to Daniel Marino, 48, for his part in the demise of Bayou Management LLC, the Associated Press reported (See  Hedge Fund Firm Charged with Fraud Files Bankruptcy ). McMahon tacked on a three-year period of supervised release at the end of Marino’s jail term .

Marino and Samuel Israel III, former Bayou CEO, pled guilty in September 2005 to conspiracy, investment adviser fraud, and other charges resulting from their scheme to inflate the value of Bayou’s funds. Israel is awaiting sentencing.

Prosecutors said that Israel and Marino misrepresented the value of Bayou Management’s funds and their performance to convince new clients to invest and to persuade existing clients to keep their money with Bayou. The two men were also charged with reporting fictitious rates of return in weekly newsletters, reporting inflated profits in annual statements to investors, and creating a phony accounting firm, Richmond-Fairfield Associates, which they claimed audited Bayou’s annual financial statements.

“I am truly sorry,” Marino told McMahan during a court hearing, according to the news report.