Judge bars girlfriend contact with Bayou swindler

Former hedge fund manager Samuel Israel III is escorted by federal law enforcement officials out of the U.S. District Court in Springfield, Massachusetts July 2, 2008 after a hearing ordering him back to New York.

NEW YORK (Reuters) - A U.S. judge on Wednesday barred the girlfriend of jailed hedge fund swindler Samuel Israel from having any contact with him because she has been charged with mailing him a magazine and $300 cash in prison.

Judge Kenneth Karas of U.S. District Court in White Plains, New York, made the order at a hearing in which Israel's girlfriend, Debra Ryan, pleaded not guilty to helping Israel stage his suicide last June to avoid reporting to prison.

Israel, head of the collapsed Bayou hedge fund group, has been in custody since surrendering to authorities in July last year after a month on the run. Ryan was arrested on June 19, 2008, on a charge of assisting her boyfriend avoid prison, and was released on bail.

Israel was sentenced last April to 20 years in prison for engineering a scam that cheated investors out of about $450 million.

Karas scheduled February 10 for Ryan to appear in court again, said Herbert Hadad, spokesman for the U.S. attorney's office for the Southern District of New York.

Hadad said Karas revealed in court that Ryan was arrested on January 9 by police in Westchester County, New York, "for introducing contraband into a federal prison."

County police spokesman Kieran O'Leary said Ryan is accused of mailing a magazine containing $300 in cash to Israel in December and faces a maximum penalty of up to one year in jail on the charge, a misdemeanor.

"The magazine was discovered by corrections officers during a screening of mail," O'Leary said.

In June, after Israel failed to arrive at a Massachusetts prison, his car was found abandoned on a New York bridge with the words "suicide is painless" scrawled in dust on the hood. But when no body was found, police quickly labeled him a fugitive. He turned himself in a month later.

Under court order, Israel is in a federal prison in Ayer, Massachusetts, for physical and psychological evaluation.

In August last year, a judge refused to accept Israel's plea of guilty to a charge of bail jumping, saying he was concerned that medication the former investment manager was taking to wean him off painkillers could be clouding his judgment.

(Reporting by Grant McCool, editing by Matthew Lewis)