New York Times- A founder of several Bayou Management hedge funds was sentenced to more than four years in prison Tuesday for a scheme to defraud investors.
Judge Colleen McMahon in Federal District Court in Manhattan sentenced James G. Marquez, 59, to 51 months in prison, to be followed by two years of supervised release. He also was ordered to pay nearly $6.26 million in restitution.
“I made the terrible choice to take the easy way out when things started going wrong at Bayou,” Mr. Marquez said. “My actions and inactions directly injured investors of Bayou.” Mr. Marquez, who left Bayou in 2001, pleaded guilty to a conspiracy charge in December 2006.
Prosecutors said that Mr. Marquez conspired with Samuel Israel III, Bayou’s chief executive, and Daniel Marino, its chief financial officer, from 1996 to October 2001, to induce investors to contribute to funds by misrepresenting that the money-losing funds were highly profitable.
Mr. Marquez founded the Bayou funds with Mr. Israel, the government said. Bayou Management abruptly closed its doors in July 2005.
The fraud ballooned from more than $6 million when Mr. Marquez left the company to more than $400 million when Bayou closed its doors. In September 2005, Mr. Israel and Mr. Marino pleaded guilty to conspiracy, investment adviser fraud and other charges in connection with a scheme to defraud investors through the improper inflation of the value of Bayou’s funds. They are awaiting sentencing.
