Samuel Israel III, Daniel E. Marino, and an associate, carried
out a scheme to defraud investors in a family of hedge funds
controlled by them directly and through defendant Bayou Management,
LLC. From 1996 through 2005, Israel and Marino misappropriated,
dissipated and lost tens of millions of dollars of their clients’
money that was invested in the Bayou Fund, and its successors,
Bayou Accredited Fund, LLC, the Bayou Affiliates Fund, LLC,
the Bayou No Leverage Fund, LLC, and the Bayou Superfund,
LLC (the “Funds”), and several related offshore
funds organized in the Cayman Islands. Investors deposited
more than $450 million into the Funds over the course of their
existence.
Money
seized from Bayou Management hedge funds USA TODAY
Investors who thought they'd lost all their money in hedge
funds operated by Bayou Management breathed a sigh of relief
Tuesday when the Arizona attorney general's office disclosed
that in May it seized $101 million in funds associated with
the defunct Connecticut-based hedge fund.
Bayou
hedge fund founder, CFO plead guilty The Associated Press
Samuel Israel III, who founded Bayou and was its chief executive,
pleaded guilty in federal court to conspiracy, investment
adviser fraud and mail fraud. His chief financial officer,
Daniel Marino, pleaded guilty to those charges and wire fraud.
Bayou
founder, CFO plead guilty to fraud CNN/Money
The SEC also charged that Israel and Marino created a sham
accounting firm, Richmond-Fairfield Associates, to issue fake
audits attesting to the phony results, and that Israel and
Marino stole from investors by withdrawing incentive fees
every year, which they were not entitled to because the fund
never returned a profit.
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