International Law

Marino Sentenced 20 Years for Defrauding Investors of Over $450 Million

Former Exec Sentenced for Defrauding Investors of Over $450 Million: "Defrauding"

DANIEL E. MARINO was sentenced today to 20 years in prison for defrauding investors in the now-collapsed Bayou hedge funds of more than $450 million.

The sentence was imposed by United States District Court Judge COLLEEN MCMAHON in Manhattan federal court. MARINO pleaded guilty on September 29, 2005, to conspiracy, investment adviser fraud, mail fraud and wire fraud.

In imposing the sentence, Judge MCMAHON said that she was sending a message to the securities and other industries that people entrusted with other people’s money have an obligation to be truthful and forthright, at whatever cost to themselves.

She described MARINO as “the linchpin of the fraud.”

According to publicly filed documents, between 1996, when the first Bayou fund was opened, and August 2005, when a series of Bayou funds collapsed, the funds sustained consistent losses.

Investors, however, were regularly told that the funds were reaping substantial gains.

MARINO, who was the Chief Financial Officer and Chief Operating Officer of Bayou, admitted during his guilty plea that he and SAMUEL ISRAEL, III, the Chief Executive Officer of Bayou, along with JAMES G. MARQUEZ, who ran the first Bayou fund with ISRAEL, hatched a scheme in 1998, after the fund sustained a second year of losses.

At that time, the three agreed that MARINO, a Certified Public Accountant (“CPA”), would form a sham CPA firm called Richmond-Fairfield Associates to sign off on the fraudulent financial statements that were disseminated to future and current investors.

Thereafter, according to the Information to which MARINO pleaded guilty, beginning in 1999, they sent out, among other things, financial statements, in which Bayou falsely reported profits and falsely asserted that Richmond-Fairfield Associates was an independent auditor that had audited Bayou and certified its financial statements.

(Via FBI in the News.)

One of bizop's favourite fraudster now gets a 20 time out to "reflect".

Full post as published by Misleading Advertising Law on February 05, 2008 (boomark / email).