Hedge Fund Owner Cheats Investors Of $450 Mill,, Vanishes

[Ichingcarpenter]

Samuel Israel, founder of the Bayou hedge fund group has disappeared the day he was to begin a 20 year prison term for defrauding investors of $450 million. Police have put out 'Wanted' posters, and describe him as 'armed and dangerous.'

Founded in 1996, the fund raised about $300 million from investors, promising them that the fund would grow to $7.1 billion in ten years. The fund however never seems to have made any money and got along by overstating gains, or reporting gains where there were losses. In 1998, about three years after the fund was launched, international financial markets were in turmoil following the Asian crisis, and in America things were made worse by the threatened collapse of Long Term Capital Management. The fund made huge losses. In order to cover their losses the group approached investors for fresh money. In order to attract investors , Israel allowed them to join by bringing in a minimum of only $250,000, which is much smaller than the amounts typically demanded by hedge funds. He also waived his management fees and charged only 20% of the fund's profits as his remuneration. Simultaneously he hired a fresh firm of auditors who were willing to fake accounts to hide the mountain of losses the firm was saddled with.

In April of this year, Israel was sentenced to 20 years in prison and ordered to pay a fine of $300 million after pleading guilty to defrauding investors. On the 10th of June he vanished just hours before he was to begin serving his sentence. It could be suicide, but people suspect that he has faked his death and is on the run.

http://financial-blogs.blogspot.com/2008/06/hedge-fund-manager-cheats-investors-of.html

[indepat]

1. God, how I love it so

[havocmom]

2. With that kind of money floating around, why do judges not lock rich hucksters up immediately?

People with that sort of resource SURLY should be considered a flight risk. Contempt for rule of law had already been demonstrated by the magnitude of the crime. Judges need to get over this bias that white collar criminals are really just good boys gone temporarily bad, pulling pranks, and are truly contrite. They need to get over thinking rich bastards will do the right thing and turn themselves in at some pre-arranged date.

Poor people, working class people, people of color don't seem to get such generous consideration as rich white guys whose crimes have hurt many, many people. Time to make judges' understand that flight also happens with rich white. Poor, working class, people of color don't generally have the resources of these corporate criminals. Why do they not put these guys into custody in jail as soon as the verdict is read. They can work on their appeals from prison, just like the rest of the population can.


'....liberty and justice for all' my ass.

[Wcross]

3. He was allowed to DRIVE HIMSELF to prison??????

The man was sentenced to twenty years in prison & they allowed him to drive himself? Anyone without connections would have riden the prison bus.