Collapsed hedge fund co-founder sentenced to 20 years on fraud charges

[JURIST] A federal judge on Monday sentenced Samuel Israel, III, co-founder of collapsed hedge fund Bayou Group [JURIST report], to 20 years in prison. US District Judge Colleen McMahon also ordered Israel to make $300 million in restitution and forfeit interests in a $100 million account. In 2005, both Israel and Chief Financial Officer Daniel Marino pleaded guilty [JURIST report] to charges that included mail fraud, wire fraud, investment adviser fraud, and conspiracy to commit investment adviser fraud.

Bayou was only one example of what authorities say is a growing amount of fraudulent activity involving the loosely regulated hedge funds. Securities and Exchange Commission Chairman Christopher Cox has consistently urged Congress to permit the SEC oversight over hedge funds [JURIST report], saying that regulation is necessary to protect retail investors and prevent fraud. Reuters has more.



 

About Paper Chase

Paper Chase is JURIST's real-time legal news service, powered by a team of 30 law student reporters and editors led by law professor Bernard Hibbitts at the University of Pittsburgh School of Law. As an educational service, Paper Chase is dedicated to presenting important legal news and materials rapidly, objectively and intelligibly in an accessible format.

© Copyright JURIST Legal News and Research Services, Inc., 2013.