Samuel Israel III (born July 20, 1959)[1] is an American fraudster and former hedge fund manager for the Bayou Hedge Fund Group, which he founded in 1996. In 2008, Israel was sentenced to 20 years in prison and ordered to forfeit $300 million for defrauding his investors.
Samuel Israel III
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|---|---|
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| Born | (1959-07-20) July 20, 1959 (age 64) |
| Occupation(s) | Former hedge fund manager and investment advisor |
| Criminal status | Incarcerated |
| Criminal charge | Fraud |
| Penalty | sentenced to 22 years |
Israel was born into a Jewish family of wealthy commodities traders.[2] He attended Hackley SchoolinTarrytown, New York.[3] He attended Tulane University but does not have a college degree.[4]
In 1996 Israel founded the Bayou Hedge Fund Group, which raised $450 million from its investors and for which Israel was CEO. Bayou and Israel misappropriated these funds for personal use, running what would later be revealed as a Ponzi scheme. After poor returns in 1998, the firm founded a dummy accounting firm, which they hired to audit themselves in order to keep up appearances to investors.[5]
In an attempt to recoup investing losses, Israel became embroiled in a series of highly speculative if not outright fraudulent schemes.[2] He gave a $10 million loan to Robert Booth Nichols, a self-described espionage agent who gave Israel as collateral a series of supposed bonds from a vast and secretive "shadow market". These and other schemes all were unsuccessful for Israel, who was also heavily abusing cocaine and dealing with a series of painful surgeries.[2]
The scheme was exposed after a series of investors grew suspicious and demanded their funds from Bayou only to be rebuffed.[2] On September 29, 2005 the Commodity Futures Trading Commission (CFTC) filed charges against Bayou, Israel, and Bayou CFO Daniel Marino.[6] The next year, the hedge fund filed for Chapter 11 bankruptcy-court protection.[7]
On April 14, 2008, Israel was sentenced to 20 years in prison and ordered to forfeit $300 million after pleading guilty to defrauding investors in his bankrupt firm.[8] He was allowed to remain free until sentencing due to pre-existing medical issues that needed treatment.[2]
In June 2008, instead of surrendering to serve his sentence as scheduled, Israel faked his own suicide. He briefly lived as a fugitive but surrendered in July 2008, and his prison sentence was increased by two years as penalty for bail jumping. [9]
Israel's health is failing. He has been denied early compassionate release requests in 2014 and 2019, with the presiding judge stating that it would not promote respect for the law to go easy on white-collar criminals who have privileged backgrounds and can afford top-flight lawyers. [9]
Sentenced in April 2008 to 20 years in federal prison, Israel failed to report to prison as ordered on June 9, 2008. His 2006 GMC Envoy was found abandoned on the Bear Mountain Bridge on June 10, 2008 with "Suicide is Painless" (the title of the theme song for both the movie and TV series M*A*S*H) written in the dust on the hood. Police suspected that this was an attempt by Israel to fake his own death in order to avoid prison.[10] Israel's girlfriend, Debra Ryan, was arrested later that same month for aiding and abetting his escape, and was released on bail. Under intense questioning, Ryan admitted to helping him escape, and that she and Israel parked an RV loaded with Israel's belongings near Bear Mountain Bridge on the day before his disappearance.[11] The pair were featured on America's Most Wanted.[12]
Israel was eventually tracked down to a campground in Granville, Massachusetts, and surrendered to authorities on July 2, 2008. As a consequence, he was further sentenced on July 15, 2009, to an additional two years in prison while his girlfriend was sentenced to three years' probation. Israel is serving his sentence at Federal Correctional Institution, Butner LowinButner, North Carolina. In 2019, he applied for early release, citing the First Step Act. This application was denied, and Israel's scheduled release date is May 10, 2026.[9]
ADateline segment about him aired on September 5, 2008.[13] Israel is the subject of the "Suicide is Painless" episode of American GreedonCNBC, first broadcast on February 3, 2010.[14]
In the 2023 Netflix documentary series Madoff: The Monster of Wall Street detailing the rise and fall of Bernie Madoff, the arrest of Israel is depicted as a precursor to the public uncovering of Madoff's multibillion-dollar Ponzi scheme.[15]
But Sam the 3rd had never actually graduated from college.