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Sam Israel gets 2 extra years in prison

July 15, 2009 12:33:57 PM PDT
Hedge-fund swindler Samuel Israel III was sentenced Wednesday to two more years in prison for trying to skip out on his 20-year sentence for fraud. Federal Judge Kenneth Karas said Israel was "thumbing his nose at the system" when he faked his suicide and jumped bail last year rather than do time for taking hundreds of millions from investors in his Stamford, Conn.-based Bayou hedge funds.

Israel surrendered after 22 days on the lam.

Just before he was sentenced, Israel apologized and offered "an explanation." He said doctors had told him he would not live 20 years, and "When I heard the 20-year sentence I had trouble accepting the idea that I was spending the rest of my life in prison."

The judge agreed that Israel, 49, may not live out his sentence, and said his health issues were part of the reason Israel had been allowed to surrender on his own for the 20-year prison stretch. He said Israel "took advantage of that gesture ... and tried to use it to his advantage by fleeing."

Karas also noted that Israel's decision to take off was not done on impulse: he had bought a motor home, packed it with supplies and even had it inspected before his prison date.

Federal guidelines called for adding no more than 18 months to Israel's prison time. But Karas said he imposed more time in hopes of dissuading other convicts from fleeing to avoid long sentences.

Alluding to Bernard Madoff's 150-year sentence, he noted that long sentences were becoming more common for white-collar criminals.

The judge said it was the first time in his five years on the bench that he had imposed a sentence above the guidelines.

On June 9, 2008, Israel, who lived in Armonk, was supposed to drive himself to a federal prison hospital in Massachusetts. But prosecutors say he instead abandoned his SUV on the Bear Mountain Bridge north of New York City, etched "Suicide is Painless" into the dust on the hood, and took off.

"Suicide is Painless" is a song that became famous as the theme of the TV show "MASH." The song was sung during a fake suicide in the 1970 movie the TV show was based on.

Investigators checked for a body in the Hudson River below the bridge but also launched a manhunt. They eventually learned from Israel's girlfriend that he had loaded a motor home with clothing and a scooter and gone on the lam.

On July 2, 2008, after apparently spending a few weeks in a campground, Israel drove up on his scooter and surrendered at a Southwick, Mass., police station.

He was returned to Manhattan, where the judge who had sentenced him said, "Welcome back, Mr. Israel," and ordered his $500,000 bail forfeited.

His original 20-year sentence was for deluding investors by making it appear his hedge funds were profitable when they weren't.

He made so much money he could rent a house from Donald Trump for $32,000 a month.

Soon after he surrendered, Israel said he was willing to plead guilty for his refusal to report to prison, but Karas ordered a medical evaluation after Israel said treatment for his addiction to painkillers - set off by multiple back surgeries - was affecting his thinking.

The medical report found that Israel was competent to stand trial or enter a plea. Aside from back problems and the addiction, most of Israel's medical problems have remained secret.

Israel's girlfriend, Debra Ryan, 45, avoided jail time after pleading guilty to helping him abscond. She is also accused of trying to send him $300 in cash while he was in jail by hiding the money in the pages of a magazine.


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