Suicide note rang alarm bells over Bayou Management hedge fund millions

Suicide note rang alarm bells over hedge fund millions
By James Doran
Our correspondent examines the strange story of a New England investment firm accused of a seven-year fraud



DANIEL MARINO sat at his desk on a hot August day, hands poised at the keyboard to type a letter to investors in Bayou Management, the hedge fund of whom he was finance director. “This is my suicide note and confession,” he began, before tapping out six pages to detail an alleged seven-year fraud that could cost investors more than $300 million (£163 million).

Bayou Management was a small hedge fund run out of a cream-coloured cottage in Stamford, Connecticut — a picturesque corner of the American northeast, where the wealthy like to sail yachts on the crystal waters of the Atlantic. Bayou promised massive returns for those with assets of more than $1 million and at least $200,000 to invest in its risky portfolio of hedge funds. And for nearly a decade it apparently did very well.


But on July 27 Bayou unexpectedly closed down. Samuel Israel III, the founder and chief executive, said that there were was nothing wrong, other than his messy divorce and the fact that he was suffering from a bad back. Because of these personal problems, he needed to close down the funds, he said, and would hand back the money invested.

Few of his clients believed him, on either count. Now authorities in the United States, including the Securities and Exchange Commission, the Justice Department, the FBI and the Connecticut Department of Banking are investigating Bayou’s collapse. Mr Marino’s suicide note is a key piece of evidence.

http://www.timesonline.co.uk/newspaper/0,,170-1764946,00.html