By Larry Neumeister
The Associated Press
NEW YORK — A hedge fund swindler who set off a national manhunt when he faked his suicide to avoid reporting to prison surrendered Wednesday to small-town police in Massachusetts.
U.S. Marshals said his own mother helped broker the surrender. Authorities suspect he had been hiding out in RV parks and highway rest areas for three weeks.
Samuel Israel III, 48, walked into the police station in Southwick, Mass., at about 9:15 a.m. wearing a colored T-shirt and shorts, identified himself and said he was a fugitive wanted by the federal government, officials said.
“He was polite, very contrite and a perfect gentleman at all times,” said Southwick police officer Paul Miles.
Israel later appeared in federal court for a brief hearing in Springfield, Mass., where a judge ordered him sent back to New York. Already facing a lengthy prison term for conspiracy and fraud, Israel was charged Wednesday with failing to surrender to serve a federal sentence.
Israel disappeared June 9 just hours before he was to report to prison to begin serving a 20-year sentence handed down in April for his role in the collapse of the Bayou hedge funds.
Israel’s SUV was found abandoned on a bridge over the Hudson River north of New York City with the words “Suicide is Painless” - the title of the theme song for the television show “M.A.S.H.” - scrawled in dust on the hood.
Prosecutors said he and two other men scammed investors into putting $450 million into the funds by announcing nonexistent profits and providing fake audits, and made millions in commissions on trades that lost money for the investors. The collapse of the funds prompted calls for stricter oversight.
His lawyer, Lawrence S. Bader, did not immediately respond to a call seeking comment Wednesday.
Frank Dawson, public information officer for the U.S. Marshals Service in Boston, said Israel was talking to his mother on his cell phone when he surrendered. He said the marshals’ service had been in contact for several days with Israel’s mother in Illinois and, as a result, the surrender was “more or less expected.”
“Obviously, she probably had some kind of influence, which mothers usually do,” Dawson said. “He knew they were getting close to him, so he probably did the right thing.”
Officials said the recreational vehicle in which Israel fled was found in nearby Granville, Mass. Israel had planned to surrender in Granville but that town’s part-time police department was closed, so he rode a motor scooter to Southwick to turn himself in, they said.
Almost as soon as Israel’s SUV was found on the bridge, its key in the ignition, authorities suspected he had faked his disappearance. No body was found beneath the 150-foot-high bridge.
Officials said Israel fled in the RV with a scooter and other belongings. He was thought to be staying at RV parks, campgrounds or highway rest areas.
His girlfriend, Debra Ryan of Armonk, was arrested 10 days after his disappearance and charged with aiding and abetting his escape.
Ryan told authorities that on the day Israel was to surrender, she drove her car and he drove the RV to a rest area. Israel parked the RV there, and the two drove back to their home.
After Israel stopped on Bear Mountain Bridge, near West Point about 40 miles north of New York City, surveillance video showed a second car slowly pass his SUV and then stop.
That could explain how he got from the bridge to the rest area, but authorities have never confirmed reports that the driver of the second car had been questioned.
Ryan could face as many as 10 years in prison if convicted in the scheme to help Israel flee.
Southwick, where Israel turned himself in, is near the Connecticut line about 100 miles southwest of Boston. It is also about 95 miles from the federal prison in Ayer, Mass., where Israel was to report.
In a separate development, federal prosecutors announced Wednesday that more than $115 million is available to pay back victims of the Bayou fraud. The money includes whatever was forfeited by Israel and his co-defendants as part of their sentences, plus interest. The total loss to investors was about $300 million.