UPDATE 1-Woman charged with helping hedge fund manager flee

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By Svea Herbst-Bayliss

BOSTON, June 19 (Reuters) - U.S. authorities arrested on Thursday the girlfriend of fugitive former hedge fund manager Samuel Israel III, accusing her of helping to stage his suicide on the day he was to report to prison for fraud.

Debra Ryan confessed on Thursday to federal authorities that she helped Israel pack a recreational vehicle with his belongings and park it at a rest stop near a highway in New York on June 9, the day he went missing.

The details are contained in a three-page complaint, filed in the U.S. District Court for the Southern District of New York, that said Ryan "unlawfully, wilfully and knowingly aided and abetted" Israel's failure to show up for prison.

Israel, who engineered the $2 trillion hedge fund industry's most brazen and long-running fraud, sparked a federal investigation after his GMC Envoy was found on a bridge above the Hudson River on June 9, its engine idling and the words "suicide is painless" etched in dust on its hood.

Authorities last week ruled out suicide and have issued a "wanted" posted for the balding 48-year-old co-founder of the Bayou Group, a Connecticut-based hedge fund. He pleaded guilty in 2005 and was sentenced in April for his role in a scheme to fabricate returns and cheat investors out of $450 million.

Authorities interviewed Ryan on "numerous occasions" since Israel disappeared, the complaint said.

On the day he went missing, she told police he had left home at 9:30 a.m., saying he was driving himself to prison to begin serving his 20-year sentence. His SUV was discovered about three hours later on New York's Bear Mountain Bridge.