Samuel Israel III - Bayou Group

He conned wealthy investors and rented a mansion from Donald Trump. The feds caught him at a campground.

Samuel Israel III – Born: July 20, 1959.

Samuel Israel III ran the Bayou Group and scammed his investors out of about $450 million – cementing his place as one of the most notorious fraudsters in the hedge fund industry.

In 2008, he was sentenced to 20 years in prison, but he skipped out. He faked his suicide by abandoning his car near the Bear Mountain Bridge in New York and scribbling “Suicide is Painless” in the dust on the hood. Like that would be convincing.

His flight from authorities was even less successful than his financial career. Feds launched a nationwide manhunt and found him living in a recreational vehicle at a rural Massachusetts campground. He’d been on the run for less than a month. His girlfriend Debra Ryan received three years probation for helping him dodge authorities.

Before all this, Israel had been leasing a $32,000 a month mansion from none other than Donald Trump. He fled a life of Trumpian luxury to squat in an RV park.

Israel co-founded Bayou Group 1996, promising investors consistently high returns. Like a lot of money managers who turn out to be frauds, he was a lot better at sales pitches than actual investment strategy.

Israel came from a wealthy New Orleans family and leveraged family and industry connections. He sold investors on a complicated trading strategy, but Bayou apparently never made money by trading.

As the company foundered, Israel and his associates created bogus financial records to make it appear it was thriving. They even created a fake accounting firm to pull this off. Instead of admitting losses, they used new investor money to pay off old investors in classic Ponzi style.

Hedge funds are risky investment portfolios, typically for the wealthy and large institutions. They employ unique investment strategies, and they are largely unregulated, under the theory that their investors are sophisticated folks and should know what they are doing.

Unfortunately, even sophisticated folks can be conned by people they think they know. Among Bayou’s victims were Martin Payson, the former vice chairman of Time Warner, and the Jewish Federation of Metropolitan Chicago.

Israel also conned a former Goldman Sachs managing director, Steven Starker, into lending him $3 million. Israel repaid Starker with two bad checks imprinted with SpongeBob SquarePants.

Israel also stiffed Trump on $64,000 in unpaid rent – a remarkable feat, stiffing an infamous stiff.

The scheme unraveled in 2005 and Israel eventually pleaded guilty to investment fraud, conspiracy, and other financial crimes. He was also ordered to pay $300 million in restitution.

He is scheduled to be released from prison in June 2026.