FourWinds10.com - Delivering Truth Around the World
Custom Search

Fund Manager Who Faked His Suicide Surrenders

Abha Bhattarai

Smaller Font Larger Font RSS 2.0

Samuel Israel III tricked his investors, lied to his lawyers and misled the police. But in the end, he listened to his mother.

The fugitive former manager of the Bayou Group hedge fund, whose faked suicide on a Hudson River bridge and subsequent disappearance last month set off an international manhunt, turned himself in Wednesday morning in Southwick, Mass., just after speaking to his mother by phone.

Unlike some other notable fugitives, Mr. Israel, did not make it very far. He apparently spent the last four weeks living in a recreational vehicle at a Massachusetts campground, picking up supplies at the camp’s small store.

Shortly before he walked into the Southwick police station at 9:15 a.m., Ann R. Israel informed United States marshals that her 48-year-old son planned to surrender. A spokesman for the marshals, Dave Turner, said “it appears Mrs. Israel and other family members played an important role in Mr. Israel’s decision to face justice.”

Mr. Turner said that Mrs. Israel had been in close contact for at least several days with Ed Farrell, a deputy United States Marshal investigator with the Great Lakes Regional Fugitive Task Force in Illinois.

“The mother was concerned about her son’s welfare,” Mr. Turner said. “She indicated to Mr. Farrell that he was reaching out to her and other family members, and the advice he got seems to be that he should do the right thing and turn himself in.”

Mr. Israel, the scion of a wealthy New Orleans family, now faces several more years in jail on top of the 20-year sentence he received in April for defrauding investors out of $450 million after the collapse of his Bayou Group hedge fund.

Mr. Israel’s reappearance was as uneventful as his disappearance was dramatic.

After driving up to the police station on a Yamaha scooter, according to Paul Miles, a Southwick police officer, Mr. Israel told officers: “I am a fugitive, I was supposed to go to jail and I’d like to turn myself in.”

On June 9, his sport utility vehicle was found abandoned on the shoulder of the Bear Mountain Bridge on the Hudson River, with the words “suicide is painless” written in the dust on the hood. The words are the title of the theme song from the movie and television show “M*A*S*H.”

The car keys and a bottle of pills were still in the vehicle, but authorities quickly concluded he had faked his death.

Authorities said Mr. Israel actually abandoned his car, and then made his way to a recreational vehicle that he and his girlfriend had stashed at a rest area off Interstate 684 early that morning, after leaving their home in Armonk, N.Y. The girlfriend, Debra Ryan, has since been charged for her role in his flight.

After the faked suicide, Mr. Israel headed north and arrived later that day at Prospect Mountain Campground RV Park in Granville, Mass., where he spent much of June, according to the camp’s director, Mitch Hayes.

“He seemed like a nice guy,” Mr. Hayes said, adding that Mr. Israel went to the campground’s store every few days to buy food and cigarettes. “There was nothing suspicious about him.”

Despite a long history of back pain and other medical problems that were listed in his lawyer’s presentencing memorandum, Mr. Israel apparently managed to travel easily on his motorized scooter. He also has a pacemaker, and once battled an addiction to painkillers, according to the memorandum.

Mr. Israel signed into the campground under an alias, David Klapp, according to Mr. Hayes, and said that family members planned to visit. Mr. Israel, who is divorced, has a son and a daughter, both teenagers. Mr. Hayes did not recall seeing any visitors for him but said the campground can accommodate more than 200 families.

The police said Mr. Israel ultimately decided to surrender in Granville, Mass. But the bucolic town of 1,500 has only a part-time police department, and when Mr. Israel found the station there closed, he headed seven miles east to Southwick on his scooter.

Two former associates of Mr. Israel’s are already behind bars for their role at Bayou, whose collapse in the summer of 2005 was one of Wall Street’s most brazen frauds in recent years.

Mr. Israel’s lawyer, Lawrence S. Bader, did not return calls. However, in a memorandum to the federal judge, Colleen McMahon of Federal District Court in Manhattan, Mr. Israel and his legal team assured the court he was not a flight risk.

Officials at the marshals service said Mr. Israel decided to surrender after they had applied pressure to his friends and former associates for weeks.

Mr. Israel was kept in a cell in Southwick before being transferred to the federal courthouse in Springfield, Mass. He is scheduled to appear Thursday before Judge McMahon in Manhattan.

Mr. Israel’s surrender marks a bizarre end to a case that had captivated Wall Street, where his family is still remembered by old-timers for their long history in the commodity business.

Mr. Israel’s grandfather and namesake, Samuel Israel, helped expand what had been a New Orleans family company into ACLI International, a commodity powerhouse that was sold to Donaldson, Lufkin & Jenrette for $42 million in 1981.

Mr. Israel had long sought to live up to his family’s name, and their involvement in his surrender reflects the close links he still has with his relatives in New Orleans and elsewhere. “Ever since I can remember,” he had written in a letter to the judge, “I met people everywhere that have told me they know my family either directly or by reputation. I cheated my investors because I was afraid to admit my failure.”

Both of his brothers wrote letters to the judge seeking leniency, as did his mother.

In her letter, Mrs. Israel said she was “not exactly sure what led to the trouble Sam is in now. Perhaps he put too much trust in those around him. Perhaps it was inattention to detail — a fault Sam has had since he was young. Perhaps it was a desire to win his father’s love and admiration by becoming a huge success on Wall Street.”

Mrs. Israel, who now lives in suburban Chicago, was unavailable for comment. His father, Lawrence J. Israel, is well known for his philanthropy in New Orleans.

The resolution of the manhunt was greeted with relief by Mr. Israel’s victims. “They can’t wait to see him start serving his jail time,” said Ross Intelisano, a lawyer who represents 20 Bayou investors who had lost roughly $25 million. “He might be a criminal but at least he listened to his mother.”

Mr. Israel pleaded guilty to charges of conspiracy and fraud after losing millions of dollars and producing fake audits to hide the hedge fund’s poor results.

Unlike some other notable American fugitives, Mr. Israel did not try to flee until after he had been convicted. After his conviction, he was forced to surrender his passport.

Robert Vesco, who died last November, spent nearly four decades on the run, first in the Bahamas and Costa Rica, and later in Cuba, after he evaded charges that included securities fraud, drug trafficking and bribery.

Jacob Alexander, a former chief executive of Comverse Technology, fled to Namibia in 2006, where he is living with his wife and three children. Mr. Alexander faces charges in the United States of securities fraud, money laundering and conspiracy.

Some observers speculated that Mr. Israel had long ago left the country, but Todd Harrison, a former prosecutor who now specializes in white-collar criminal cases, says most fugitives do not go very far from home.

“There was nowhere for him to go so he had to drive around locally,” he said. “The marshals were after him as soon as he disappeared. There was no way he was going to be able to get on a plane or cross any borders, and life on the run is a hell of a lot harder than people think.”

An earlier version of this article misspelled the name of the city where the federal medical center is located. It is Ayer, Mass., not Ayers.

www.nytimes.com/2008/07/03/business/03bayou.html