Attorney says N.Y. swindler not fit for court

updated 4:40 p.m. ET Sept. 16, 2008

WHITE PLAINS, N.Y. - A hedge-fund swindler accused of faking his own death is not yet competent to enter his long-expected guilty plea for skipping out on a 20-year prison term, his attorney said Tuesday.

A federal judge postponed Samuel Israel III's hearing until Oct. 22 after defense lawyer Barry Bohrer told him drug therapy is affecting Israel's "ability to perceive and actively understand what's going on."

Israel's previous attempt to plead guilty was postponed last month when he told Judge Kenneth Karas that he was operating at "about 70 percent" because he was being treated with methadone to wean him from an addiction to a painkiller prescribed after back surgery.

Israel, 49, was sentenced in April for conspiracy and fraud after he fleeced investors of nearly a half-billion dollars by making it appear his hedge funds were profitable.

He was supposed to go to prison on June 9, but authorities say he faked his suicide on a Hudson River bridge by leaving his SUV there with the words "Suicide is Painless" etched into the dust on the hood. He went on the lam in an RV until surrendering on July 2.

Bohrer told the judge that he was basing his assessment of Israel on interactions including "a lengthy conversation this morning." After the court session, Bohrer told reporters, "In my mind he's less able to proceed this time than last time."

"I think in order to proceed Mr. Israel should be clearheaded and able to fully understand the proceedings and as long as there's any question there's no reason to push the issue," he said.

Bohrer said Israel has not reacted well to his medical treatment at the Westchester County Jail in Valhalla, and the judge urged Bohrer and prosecutor Sarah Krissoff to make sure Israel "gets what he needs" while he's there.

If Israel ever does plead guilty to failing to report to prison, he could get as much as 10 years added to his sentence. His girlfriend is charged with abetting his failure to surrender.

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