Hedge Fund Fraud Gets 20 Years

Samuel Israel denied leniency in $400M investor 'ponzi scheme'
By Nick McMaster,  Newser Staff
Posted Apr 14, 2008 4:45 PM CDT
Hedge Fund Fraud Gets 20 Years
Samuel Israel III, right, arrives at the United States Courthouse in New York, Monday, April 14, 2008.    (AP Photo/Craig Ruttle)

(Newser) – The founder of defunct hedge fund Bayou Group was given a 20-year prison term today for bilking investors out of more than $400 million, Bloomberg reports. Samuel Israel must also pay $300 million in restitution for masterminding a “ponzi scheme” in which investment returns were paid with new investors’ money. His sentence is the longest for a white-collar crime since Enron litigation.

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"You were, in every meaning of the sense, a career criminal … you ruined lives," US District Judge Colleen McMahon told Israel at sentencing. "Financial fraud, white-collar crimes are every bit as heinous as every other type of crime and they will be punished severely." (Read more hedge fund stories.)

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