Samuel Israel III | |
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 | |
| Born | July 20, 1959 |
| Occupation(s) | Former hedge fund manager and investment advisor |
| Criminal status | Incarcerated |
| Criminal charge | Fraud |
| Penalty | sentenced 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.
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]
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]
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 Israel attempted 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]
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]
Fred Wilpon is an American real estate developer and former baseball executive. He was principal owner of the New York Mets from 1987 to 2020.
The Bayou Hedge Fund Group (1996-2006) was a group of companies and hedge funds founded and headed by Samuel Israel III. Approximately $450m was raised by the group from investors, who were defrauded from nearly the start with funds being misappropriated for personal use.
The Federal Correctional Complex, Butner is a United States federal prison complex for men near Butner, North Carolina. It is operated by the Federal Bureau of Prisons, a division of the United States Department of Justice. FCC Butner is about 25 miles (40 km) northwest of Raleigh, the state capital. It includes the Bureau's largest medical complex, which operates a drug treatment program and specializes in oncology and behavioral science. Among its inmates was Bernie Madoff, who was convicted for perpetrating the largest Ponzi scheme in history. He died at the prison in April 2021.
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The Madoff investment scandal was a major case of stock and securities fraud discovered in late 2008. In December of that year, Bernie Madoff, the former Nasdaq chairman and founder of the Wall Street firm Bernard L. Madoff Investment Securities LLC, admitted that the wealth management arm of his business was an elaborate multi-billion-dollar Ponzi scheme.
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Participants in the Madoff investment scandal included employees of Bernard Madoff's investment firm with specific knowledge of the Ponzi scheme, a three-person accounting firm that assembled his reports, and a network of feeder funds that invested their clients' money with Madoff while collecting significant fees. Madoff avoided most direct financial scrutiny by accepting investments only through these feeder funds, while obtaining false auditing statements for his firm. The liquidation trustee of Madoff's firm has implicated managers of the feeder funds for ignoring signs of Madoff's deception.
Al Parish is a former Charleston Southern University economist and business professor, who was sentenced to federal prison after pleading guilty to financial fraud. Nearly 300 people lost up to $66 million invested in Parish Economic's private investment funds.
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But Sam the 3rd had never actually graduated from college.
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