Hedge fund fraud brother pleads guilty to concealment

5 September 2008

The brother of a jailed hedge fund manager has pleaded guilty to helping to conceal fraud.

Matthew Marino, brother of ex-Bayou Group finance head Daniel, told New York federal prosecutors of his knowledge of the crime, which defrauded clients of around $400 million.

The defendant could now face up to three years in jail under federal sentencing guidelines - while his brother and Bayou co-founder Samuel Israel are currently serving 20-year terms.

Mr Israel hit the headlines this summer when, prior to sentencing, he attempted to fake his own suicide, before going on the run for a month and then turning himself in to police.

Connecticut-based Bayou's fraud came to light two years ago, after it filed for bankruptcy.

It was later found that the firm had been paying off former investors with funds derived from new ones.

"Today, Matthew Marino admitted during his guilty plea that he knew a fraud was being perpetrated on Bayou investors and that [accounting firm] Richmond Fairfield Associates was being used to conceal the fraud," the U.S. Attorney for the Southern District of New York said in a statement.

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