Hedge Fund Cheat On The Run; Faked Suicide

June 12, 2008 — -- Federal Marshals and New York State Police investigators appear certain that disgraced hedge fund manager Sam Israel III faked a suicide plunge earlier this week and is now on the run after failing to report to federal prison to begin a 20 year sentence on Monday, official sources say. Based on new information, it appears Israel "definitely did not jump and is definitely on the run," one well placed source said.

According to sources, U.S. Marshals and State Police investigators were questioning an individual whose car was recorded by surveillance video at the Bear Mountain bridge where Israel abandoned his GM Envoy. On the hood of his car, written in dust was the message "Suicide is Painless," the theme of the movie and TV series M.A.S.H. However Israel was not seen jumping, and no body has been found.

Israel had pleaded guilty to defrauding his hedge fund investors of $400 million in a Ponzi like scheme, where he used new money to create the appearance of profits for earlier investors. Despite his plea, and cooperation with authorities, and requests for leniency by his attorneys, a federal judge slapped Israel with a stiff sentence and stung him with harsh words.

US District Judge Colleen McMahon said to Israel at his sentencing, "You were, in every meaning of the sense, a career criminal. You ruined lives. Financial fraud, white-collar crimes are every bit as heinous as every other type of crime and they will be punished severely."

Lawyers for Israel had sought leniency, noting he's had numerous back operations and is addicted to painkillers. The judge had no compassion in her voice when she said, "He suffered from these ailments while he did the crime. He can deal with them while he does the time."