Bayou Hedge Fund Fraud
From 1996 through 2005, Sam Israel, a hedge fund manager in Connecticut, attracted over $450 million from investors with a promise of consistent 8-10% returns and low risk. He and Dan Marino, Bayou’s CFO, were really running a Ponzi scheme including creating a fake auditing firm for the fund. The fraud unraveled in 2005 and investors lost over $250 million. Israel was sentenced to 20 years in prison and attempted to fake his own suicide. Bayou was the first hedge fund fraud covered in detail by the world’s financial press.
Rich, Intelisano & Katz, LLP is one of the few law firms worldwide who represented U.S. and international investors related to Bayou. Starting in 2005, the Firm represented institutional and individual investors who lost over $25 million. In 2006, the Firm filed a multi-million dollar group arbitration at the American Arbitration Association (AAA) versus a registered investment advisor for failing to do proper due diligence related to Bayou. It is reportedly one of the first group arbitration claims filed against an advisor related to hedge fund fraud. The case resolved in mediation in 2007. The Firm presently represents the entire Bayou bankruptcy estate in a pending $20 million FINRA arbitration against Goldman Sachs.