Disgraced (But Not Dead) Hedge Fund Trader Admits He Faked Suicide to Evade the Law

Disgraced hedge fund trader Sam Israel III twice tried to plead guilty today for failing to report for a 20-year sentence in federal prison and instead faking a suicide dive from a New York bridge in an attempt to cover his run from the law.

But two federal judges rejected his plea, the first for technical reasons, the second because he said Israel was not mentally competent to make that decision

During the second of his federal court proceedings Israel told Judge Kenenth Karas in White Plains that he was being weaned from painkillers and was only "about 70 percent" there mentally -- not good enough for Karas. Instead, he scheduled another hearing for Israel in September. At that time, Israel is again expected to attempt to enter a guilty plea. If the plea is ever accepted, it could mean as much as 10 years added to Israel's 20-year sentence for fraud.

Israel stayed on the lam for nearly a month after staging his jump into the Hudson River from New York's Bear Mountain Bridge. He left behind a message scrawled in the dust and pollen on the hood of his SUV that read "Suicide is Painless," a line made famous by the TV show and movie M.A.S.H.

The story of Israel's faked jump and run from the law was first reported by ABC News.

Israel, a co-founder of the hedge-fund company Bayou Group LLC until its collapse in 2005, was sentenced in April to 20 years in federal prison for defrauding investors of $400 million.

He was also ordered to forfeit $300 million after pleading guilty to defrauding investors in his now-bankrupt firm. $115 million of those funds have been restored to investors, according to the US Attorney in New York's Southern District.

At that sentencing hearing Israel had sought leniency, telling the judge, "I lied to you and I cheated you, and I cannot put into words how sorry I am."

But U.S. District Judge Colleen McMahon showed little compassion, "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 pushed further, noting he'd had numerous back operations and is addicted to painkillers. That too, did not impress McMahon. "He suffered from these ailments while he did the crime," she retorted. "He can deal with them while he does the time."

Following his sentencing, Israel was released on his own recognizance, and the court ordered him to report to prison June 9. Instead, he convinced his long-time girlfriend and another friend to aid him in faking his suicide. He then left his GM SUV on the bridge, and used a scooter to drive to an RV he had parked near by. Once he had loaded the scooter onto the RV, Israel hit the road, avoiding law enforcement official until July 2nd, when they caught up with him in Massachusetts.

Sam Southwick, Mass., Police Chief Mark Krynicki, who said he recognized Israel from a recent feature on "America's Most Wanted," told ABC News Jack Date that Israel walked into the city's police station at 9:15 a.m. that morning and turned himself in to Officer Paul Miles.

A law enforcement official told ABC News that Israel said, "My name is Sam Israel. I'm wanted by the Marshals Service." Authorities said he appeared to be in good health. Miles described Israel to ABC News as a "very polite gentleman who wanted to surrender."

Last month, authorities arrested Israel's live-in girlfriend for allegedly assisting Israel in his getaway. A criminal complaint filed against Debra Ryan alleged that she repeatedly denied any knowledge of Israel's whereabouts, but then told federal investigators in a June 19 interview that she had helped the financier pack up an RV the day before he was supposed to report to prison.

Haggard-looking this morning when he arrived in the federal court house in suburban White Plains, Israel smiled and waved to a federal prosecutor and then announced his intention to plead guilty. Clad in brown prison garb, Israel made his initial appearance in U.S. District Court before U.S. Magistrate Judge Lisa Margaret Smith. She rejected his plea on technical grounds.

A former Armonk, New York resident, Israel's fund at had never been profitable. But Israel and his fellow executives managed to conceal that from investors. In the aftermath of Bayou's collapse authorities have labeled the company's funds a $450 million Ponzi scheme.