Hedge fund swindler says he turned himself in to help girlfriend

By David Abel, Globe Staff

SPRINGFIELD -- The fugitive hedge fund swindler Samuel Israel III rode a motor scooter to a police station in Southwick yesterday, where he surrendered after leading federal authorities on a three-week manhunt that began shortly after he faked his suicide on the day he was to report to prison in Ayer.

A US District Court judge later ordered Israel, who disappeared June 9 after pretending to have jumped off a bridge in New York, to return with federal marshals back to New York, where he will face charges of failing to surrender and serve his sentence.

"I'm not a danger to the community … but what I did is bad enough" Israel told the judge.

In a brief statement after the court hearing, he said the only reason he turned himself in was because police had arrested his girlfriend. "She had nothing to do with it," he said as marshals whisked him a way in a maroon Dodge. "That's the reason I'm here."

The 48-year-old Israel, a co-founder and chief executive of the now-collapsed Bayou hedge funds, was sentenced in April to 20 years in federal prison for conspiracy and fraud. He was also ordered to pay $300 million to his victims.

Prosecutors said he and two other men persuaded investors to put $450 million into the Stamford, Conn.-based company by announcing nonexistent profits and providing fake audits.

Meanwhile, they made millions in commissions on trades that lost money for investors. The fund's collapse prompted calls for stricter oversight.

Israel's girlfriend, Debra Ryan of Armonk, was arrested 10 days after his disappearance and charged with aiding and abetting his escape.

Material from The Associated Press was used in this report.