Ex-hedge fund manager to plead guilty to bail-jumping

By Martha Graybow

WHITE PLAINS, New York (Reuters) - Former hedge fund manager Samuel Israel agreed to plead guilty on Wednesday to bail-jumping after he faked his own death to avoid going to prison for defrauding investors.

But the court delayed his formal plea until later in the day, when he is due to appear before U.S. District Court Judge Kenneth Karas.

Israel, bearded and dressed in a baggy brown tee-shirt and light pants, appeared before U.S. Magistrate Judge Lisa Margaret Smith in White Plains, a suburb of New York City. He agreed to waive an indictment on a charge of failure to surrender for service of a prison sentence.

The magistrate judge told Israel: "I understand that you have decided to enter a plea of guilty." Israel told the judge he did want to plead guilty, but Smith said the formal plea would have to be entered before the district judge.

Israel, 49, sought to dupe police into believing he had committed suicide in June when he abandoned his car on a New York bridge above the Hudson River with the words "suicide is painless" written in the dust on the hood.

But no body was found, and police quickly labeled him a fugitive. Israel had been expected to report to a low-security Massachusetts prison on June 9.

After hiding in a mobile home, Israel surrendered to authorities in Massachusetts on July 2 and was transferred back to New York. He has remained in a federal holding facility since.

Israel, who ran the Connecticut-based Bayou hedge fund, pleaded guilty in 2005 to charges of conspiracy and fraud for cheating investors in a $450 million scam. He and several of his partners fabricated portfolio returns and concocted a phony accounting firm to keep the ruse going for years.

The former fund manager, who has a pacemaker and once battled an addiction to painkillers, was sentenced in April, but had been allowed to remain out on bail until June so that the prison could get the medications he needed ready.

(Editing by Lisa Von Ahn)