Bayou Hedge Fund Group
The Bayou Hedge Fund Group (1996-2006) was a group of companies and hedge funds founded and headed by Samuel Israel III. Approximately $450m was raised by the group from investors, who were defrauded from nearly the start with funds being misappropriated for personal use. History After poor returns in 1998, the investors were lied to about the fund's returns, and a fake accounting firm was set up to provide misleading audited results. In 2005, Samuel Israel III and CFO Daniel Marino pleaded guilty to multiple charges including conspiracy and fraud. Marino was convicted of fraud and sentenced to 20 years in prison. Israel was sentenced to 20 years prison and ordered to forfeit $300 million. At his sentencing Israel said "I lied to you and I cheated you and I cannot put into words how sorry I am." Scandal Starting with $600,000 of outside money in 1996, investors eventually gave the fund US$300 million. Investors were allured by a prospectus stating there would be prudent hedge fund management leading to an anticipated value of US$7.1 billion in ten years. In 1998-1999 trading losses accumulated quickly. The company started a dummy accounting firm, Richmond Fairfield Associates, and hired it to audit