Home » Crime and Fraud • US business news » Hedge fund CEO led $450m Ponzi Scheme and faked death
Hedge fund CEO led $450m Ponzi Scheme and faked death
James Duncan and Hendrix Montecastro's $142m property scam saw 100 years of jail terms
There have been many famous Ponzi schemes carried out in the U.S over the last century.
The most famous of all is the scheme carried out by Bernie Madoff, where he stole an unbelievable $64 billion in a period of more than 20 years.
Other scams include Lou Pearlman's $1 billion fraud of boybands, including The Backstreet Boys and NSYNC.
Allen Stanford's $7 billion fraud which involved him buying a cricket team is also notorious.
And Charles Ponzi was the original fraudster, carrying out a $20 million scam in 1920 - worth a massive $287 million now.
One of the less-remembered frauds was that of Samuel Israel in the mid-2000s.
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Israel was the CEO of his own company - the Bayou Hedge Group - which managed to raised $450 million dollars from investors after its formation in 1996.
After forming the company, Israel started taking this money for his own personal use, creating a Ponzi scheme.
Poor returns in 1998 led to the company founding a fake accounting firm, which it used to audit itself to keep up the appearance of success to its investors.
But in 2005, Israel was indicted.
In September of that year, the Commodity Futures Trading Commission (CTFC) filed charges against Israel and the Bayoux CFO Daniel Marino.
The following year, the hedge fund filed for bankruptcy.
Israel was sentenced to 20 years in prison and ordered to forfeit $300 million after he admitted defrauding investors.
Marino was also given the same sentence.
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However, Israel failed to report to prison the following day.
Samuel Israel faked death
Police launched a manhunt and found his car abandoned on the Bear Mountain Bridge in New York State.
The words "Suicide is Painless" were written in the dust on the hood of the vehicle.
Police suspected this was an attempt to fake his own death to avoid going to prison.
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His girlfriend was arrested later that month for aiding and abetting his escape.
She admitted she and Israel had parked an RV loaded with his possessions the day before he disappeared.
He was eventually found at a campsite in Granville, Massachusetts.
In July 2008 he was jailed for an extra two years, while his girlfriend was sentenced to three ears probation.
He applied for early release in 2019 but was denied, and is set to remain in prison until 2027.
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