Legal News

Police Investigating Possible Suicide of Former Hedge Fund CEO

By Dan Slater

The game of life is hard to play
I’m gonna lose it anyway
The losing card I’ll someday lay
So this is all I have to say. — from “Suicide is Painless,” by Johnny Mandel and Mike Altman

Yesterday, Samuel Israel III, the former CEO of defunct hedge-fund Bayou Management, was supposed to begin serving a 20-year prison term for fraud. Today, New York State police are investigating the possible suicide of Israel, according to a report by Dow Jones Newswire’s Chad Bray.

Bruce Cuccia, a state police senior investigator, said Israel’s SUV was found yesterday afternoon, parked unattended with the keys in the ignition on the Bear Mountain Bridge in Westchester County. The bridge crosses the Hudson River at one of its deepest points, Cuccia said. No suicide note was found, but written in the dust or pollen on the hood of the vehicle was, “Suicide is painless” — an apparent reference to the “M.A.S.H.” theme song. No body has yet been recovered.

Bayou claimed it had more than $400 million in assets in July, 2005, when it abruptly closed its doors. At the time, Israel told clients that the fund was solvent but that he wanted to spend more time with his children due to his divorce. One worried investor flew from the West Coast to meet with the hedge fund’s CFO, Daniel Marino. But the waterfront cottage where Bayou had its offices was empty, and inside on Marino’s desk, the investor found a letter that began: “This is my suicide note and confession.” The letter asserted that Marino, along with Israel and a former partner named James Marquez, had “defrauded all these investors.”

A federal investigation concluded that investors in Bayou collectively lost more than $400 million. Israel and Marino each pleaded guilty in September, 2005 — to conspiracy, investment adviser fraud and mail fraud charges — and both received 20 years. Marquez was sentenced to 51 months.

Israel was supposed to surrender at a federal prison in Massachusetts at 2 p.m. on Monday to begin serving his sentence.

Full post as published by Law Blog - WSJ.com on June 10, 2008 (boomark / email).