Ex-hedge fund manager Israel is sent to prison

Bayou Group manager who faked suicide and fled begins 20-year sentence for fraud

July 04, 2008|By New York Times News Service

NEW YORK - Samuel Israel III, the hedge fund manager who fled after faking a suicide last month, went to prison yesterday, 25 days late.

The federal judge who originally sentenced Israel ordered him to immediately begin serving his 20-year sentence.

At a hearing in Federal District Court in Manhattan, Judge Colleen McMahon denied Israel bail and was unsympathetic to his claim that he tried to commit suicide two days ago.

Israel, who surrendered to the police Wednesday, faces additional charges of bail-jumping and up to 10 years in prison, on top of the 20-year sentence he received in April for swindling $450 million from investors in the Bayou Group, the hedge fund that he co-founded.

Israel, who has a history of addiction to painkillers, told McMahon that he tried to kill himself Tuesday by swallowing 175 tablets of morphine along with some fentanyl transdermal patches.

"I thought it would be better to do myself in than turn myself in," Israel, 48, told McMahon. "I woke up and realized God didn't want me to do that and I turned myself in."

The U.S. Marshals Service and the Federal Bureau of Prisons will determine where Israel will serve his sentence. McMahon refused to refer Israel to a prison medical center like the one in Ayer, Mass., to which he was originally assigned.

"I am through concerning myself with Israel's medical requirements," she said. "I did that once, and Israel repaid me amply by not showing up. It was thrown in my face."

Israel, who surrendered to police in Southwick, Mass., Wednesday morning, had been on the run since the authorities found his sport utility vehicle abandoned on a bridge June 9. At yesterday's hearing, Israel arrived looking scruffy and disheveled. His graying beard was unkempt, and he wore a blue T-shirt and shorts. He did not enter a plea.

When Israel abruptly sat down in the middle of the hearing, McMahon immediately reprimanded him.

"If you can ride a motorcycle, Mr. Israel, you can stand up in my courtroom," she said.

On Wednesday morning, Israel rode up to the police station in Southwick on a motorized scooter. He walked into the lobby while talking to his mother on the phone and, according to Paul Miles, a Southwick police officer, told the authorities: "I am a fugitive, I was supposed to go to jail and I'd like to turn myself in."

Israel's surrender marked the end of an international manhunt that began nearly a month ago.

His sport utility vehicle was found abandoned on Bear Mountain Bridge on the Hudson River with the words "suicide is painless" marked in the dust on the hood shortly after 12:30 p.m. Israel's keys were still in the ignition and a bottle of pills remained in the car.

After his faked suicide, Israel hopped into a recreational vehicle and drove to Granville, Mass.

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