Fugitive Founder of Bayou Hedge Fund Turns Himself In

July 2, 2008 (PLANSPONSOR.com) - Samuel Israel III, cofounder and former chief executive of the now defunct hedge fund firm, Bayou Management LLC, has surrendered to police following a fake suicide last month.

The Wall Street Journal reports that Israel, who disappeared before he was to begin serving a 20-year prison term, turned himself in to the Southwick, Massachusetts, police department on Wednesday. Israel and former Bayou chief financial officer and co-founder Daniel Marino pled guilty to fraud charges last year.

In January, Marino was sentenced to a 20-year jail term (See Bayou CFO Draws 20-year Jail Term ).Prosecutors charged Israel and Marino with misrepresenting 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.

On June 9, approximately 90 minutes before he was supposed to report to prison, Israel’s sport-utility vehicle was found abandoned on a bridge in Westchester County with the words “suicide is painless” scrawled in the dust on the hood, according to the WSJ. Authorities ruled out the possibility that Israel jumped from the bridge in a suicide attempt, and later charged Israel’s longtime live-in girlfriend with helping him flee.