Notorious financial criminals in contemporary and modern times
Use the following links for your tasks
|Subject||Law and governance||Pages||3||Style||APA|
Samuel Israel Financial Crimes
Samuel Israel was a hedge fund manager frantic to prosper. Bayou Hedge Fund Group was created in 1996 by Israel as the CEO raised $450 million from its investors. Israel had plans of making money on short-term trades. Israel embezzled these monies for personal use. In 1998, Bayou had financial problems, and Israel was willing to do anything, even breaking the law to guarantee Bayou’s survival. Therefore, Israel sought his friend and partner, accountant Dan Marino’s help (Stempel, 2019). These two devised a plan of concealing Bayou’s financial problems from the investors by creating their independent auditing firm operated by Dan Marino to audit themselves to maintain appearances to the investors. The fictitious public accounting company the two formed signed-off on the phony financial statements. Israel fraudulently enticed investors to invest and maintain millions of dollars in Bayou via a scheme of inappropriate actions and ongoing misrepresentations and exclusions concerning the business practices and monetary results, functions, and status of Bayou (Cantrell, 2005). Israel and Marion illicitly pilfered and embezzled the monies the investors have assigned to them as financial investments (McDonald, 2005).
Israel reported false rates of return for the Bayou quarterly reports and sent those reports to the investors. Also, Israel reported individual investors exaggerated accumulated revenues in monthly reports and mailed them to investors. In 2005, Bayou suddenly shut down and failed to return investors’ monies. The Securities and Exchange Commission (SEC) filed a civil injunctive action against Israel and Marino for defrauding investors and misappropriating investor monies for their personal use. SEC is pursuing permanent injunctions for breach of the anti-fraud stipulations of the federal securities regulations against the two. In 2005 Bayou was charged, and on September 29, the CFTC filed criminal fraud allegations against Marion, Israel, and Bayou (Jeanne-Dugan and Spector, 2008). The following year, Bayou filed for Chapter eleven bankruptcy-court protection. On April 14, 2008, Israel was sentenced to twenty years in jail and directed to surrender $300 million after pleading culpable to conning investors in his bankrupt company.
McDonald, I. (September 1, 2005). Bayou Drained Accounts in ’04 Of $161 Million. The Wall Street Journal. https://www.wsj.com/articles/SB112550792590328009
Cantrell, A, (September 29, 2005). “Bayou founder, CFO plead guilty to fraud.” CNN/Money. https://money.cnn.com/2005/09/29/markets/bayou/index.htm
Jeanne-Dugan, I., and Spector, M. (July 3, 2008). After 23 Days, Fugitive Financier Surrenders. The Wall Street Journal. https://www.wsj.com/articles/SB121500889341623007
Stempel, J. (December 10, 2019). Bayou hedge fund’s Samuel Israel, who ran big Ponzi scheme, fails to win freedom. Reuters. https://www.reuters.com/article/us-usa-crime-samuel-israel/bayou-hedge-funds-samuel-israel-who-ran-big-ponzi-scheme-fails-to-win-freedom-idUSKBN1YD2E3