Mystery of the missing millionaire

John Siegesmund wasn’t the only investor with an inkling that something was horribly wrong at Sam Israel’s Bayou hedge fund.

John Seigesmund, investor: “What’s going on?  Did somebody die?  I mean, why is nobody answering the phone?”

The checks were allegedly in the mail, but at this Stamford, Connecticut house-turned-office where the Bayou fund was headquartered, the phones were ringing off the hook.

Attorney Ross Intelisano represents a group of investors who’d put a combined $25 million into Bayou.

Ross Intelisano, attorney for Israel lawsuit: All the investors were calling Bayou to find out, “Where’s the money? Where’s the money?” No one was answering the phone.

And nor was anyone apparently home at the mansion Sam Israel had rented from Donald Trump.

Seigesmund: Nobody could find him. Nobody knew where he was. 

Not content to wait for the mailman,  one investor who was owed a whopping $53 million flew across the country to try to retrieve his money in person.

He thought he could get some answers from Israel’s # 2 in command, an accountant who was also the Bayou Chief Financial Officer, a guy named Dan Marino.

Intelisano: He was known as sort of schlubby guy, had a lisp, wasn’t exactly the front man that Israel was.

But Marino, a behind-the-scenes guy who kept the Bayou books,  was nowhere to be seen either.  And after knocking on the door, that persistent investor let himself into the abandoned Bayou offices through an unlocked back entrance.

There, on the accountant’s desk, was this startling document.

In six neatly typed, single spaced pages,  the saga of the Bayou hedge fund would go from bad to worse than anyone could have imagined.

“If there is a hell, I will be there for eternity,” the document reads.

It was a suicide note.

The suicide note, left by chief Bayou accountant  was also a jaw-dropping confession. In it, he claimed that Sam Israel’s hedge fund had been a complete sham, almost from day one.

There’d been no profits ever. And much worse, apparently not a penny of the millions that investors had been expecting in the mail remained.

The investor who found the suicide note immediately called 9-1-1 and the search was on for the Bayou accountant. Was he already dead, or perhaps still alive? Was anything what it seemed?

Meantime, word leaked out to the business press that Bayou was belly-up.

Intelisano:  The investors were literally freaking out.

Investor John Siegesmund was online searching for news about Bayou, still waiting for his $250,000+ check when he read the first reports.

Seigesmund: The blood drained from my face… to realize that you had the money yesterday and today it is gone. And nobody has any idea if any of it is left or if so where it might be?

But with an accountant’s precision, the suicide note laid out an elaborate set of lies.

Intelisano: It walks through the entire story.

Dennis Murphy, Dateline correspondent: “Here’s how much money we had. Here’s how we lost it.”

Intelisano:    “You know, we claimed to have $100 million  one year, but we really only had $40 million.  We claimed to grew to $300 million, but we really only had $150,000,000.” 

Murphy: So, the emails saying, “We had a terrific quarter,” were lies.

Intelisano: Absolute lies.

But how could a scheme of this magnitude have gone undetected for so long?   Hadn’t the fund—as is required by law—been audited every year?

Well the CFO’s suicide note explained that too: The accounting firm that vouched for the Bayou books was, like all the reported profits, utterly non-existent.

Another lie, apparently directed by Sam Israel III.

Intelisano: They actually created a accounting firm, that was fake, to do annual audits. 

Murphy: It is a fake accounting firm.

Intelisano: Fake accounting firm.

Murphy: There were no other clients.

Intelisano: You call up, you get a voicemail that say, “Hi, you’ve reached Richmond Fairfield Associates. Please leave a message.” They had an office address in New York but if you went there, there was nothing there.

Even Wall Street investigator Randy Shain, who had suspected something was not quite right with Sam Israel, was shocked by the brazen deceit.

Murphy: The annual report of the Bayou fund when it said it came with the seal of Richmond-Fairfield accounting service, we’ve looked at these numbers and they look good to us...was useless? 

Shain: Well, worse than useless in that now you have this sort of stamp of, you know, the "Good Housekeeping seal of approval" when the reality is, that’s the seal of "we’re screwing you."

With its phony returns, Sam Israel’s Bayou fund, had attracted plenty of sophisticated, wealthy investors.

But in the end it was nothing more than an old fashioned Ponzi scheme.

Shain: I think what they did was just Ponzi it.

Murphy: So the classic Ponzi scheme is the suckers coming in the door—

Shain: Sure. Paying the old people—

Murphy: --paying the money are paying for the suckers who are already—

Shain: Right. "We’ll get more money because we’ll say we’re making money…"

After the shock wore off, John Siegesmund realized he’d been had, but good.

Seigesmund: This was a well-thought out, well orchestrated, long term pattern of cold blooded deceit.

A cold-blooded deceit in which, according to his six-page confession, accountant Dan Marino had been a mere pawn. He apologized.  And said goodbye.

“I am sorry” he wrote.  “I know God will have no mercy on my soul.”

Murphy: This was a suicide note?

Intelisano: Oh, yes. Oh, yes.

Murphy: But there wasn’t a suicide.

Intelisano: He did not kill himself.

After all that death-bed confessing, the Bayou accountant turned up alive and well.

In fact, police were able to reached him at home within hours of the suicide note being found. His plan to kill himself had either gone awry or had never been attempted.

The note, now in the hands of the FBI, read like a play book for a litany of federal crimes.

And soon enough, Dan Marino the accountant was cooperating with prosecutors who, like the Bayou investors, were more than a little eager to talk to Mr. Sam III.

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