MICHAEL J. GARCIA, the United States Attorney for the
Southern District of New York, announced today that
$115,601,274.69 in forfeited funds has been forwarded to the
Clerk of the Court for the Southern District of New York for
distribution to the victims of the Bayou hedge fund fraud.
SAMUEL ISRAEL III, DANIEL E. MARINO and JAMES G. MARQUEZ
were each convicted of defrauding investors by inducing them to
invest in the various Bayou hedge funds and creating fake
financial statements.
These statements falsely showed that the
Bayou funds were profitable, when in fact they sustained
substantial losses. As a result, the total loss to investors was
approximately $300 million. As part of the sentences imposed by
United States District Judge COLLEEN McMAHON, ISRAEL and MARINO
were each directed — on April 14 and 15 of this year,
respectively — to pay restitution of $300,000,000. MARQUEZ was
directed, on January 22, 2008, to pay restitution of $6,259,650.
On February 1 and April 14, 2008, $108,759,689.16 in fraud
proceeds were forfeited to the United States as part of the
sentences of ISRAEL, MARINO, and MARQUEZ. On June 5, 2008, the
Asset Forfeiture Money Laundering Section of the Department of
Justice granted the restoration request of the United States
Attorney’s Office to apply the net proceeds of that forfeiture,
plus interest, toward the partial satisfaction of the restitution
orders entered against the defendants.
The restored funds will be distributed by the Clerk of the
Court in accordance with Distribution Orders signed by Judge
McMAHON on April 14, 2008, May 5, 2008. Immediately available
for distribution to the victims is 74.82% of the restored funds;
the remainder, or 25.18%, is being held in reserve for the
possibility that investors in the Bayou Funds who redeemed all or
part of their investment prior to the discovery of the fraud, and
who currently have not suffered losses, may be ordered to return
a part of their investment in connection with the bankruptcy
proceeding, In Re Bayou Group LLC, et al, 06-22306 (ASH), and
thus would suffer a pecuniary loss as a result of the fraud.
Assistant United States Attorneys SHARON COHEN LEVIN and
MARGERY FEINZIG are in charge of the forfeiture proceedings.
08-163 ###
