Brother in Bayou fraud case pleads guilty

NEW YORK (Reuters) - The brother of the former CFO of the collapsed Bayou hedge fund pleaded guilty on Wednesday to concealing fraud of investors, the U.S. Attorney's office said.

Matthew Marino pleaded guilty in U.S. District Court in White Plains, New York, to charges that from January 2005 through August 2005 he knew about the fraud and concealed it.

Bayou Chief Executive and founder Samuel Israel 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.

In June, when Israel was to start his prison term, he sought to dupe police into believing he had committed suicide when he abandoned his car on a New York bridge above the Hudson River. After hiding for about a month, he turned himself in.

Bayou former Chief Financial Officer Daniel Marino and associate James Marquez pleaded guilty to charges of involvement in the fraud in December 2006.

"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.

It said he prevented lawyers from obtaining Bayou documents that might have revealed the fraud and made changes to a fraudulent document.

Matthew Marino faces a maximum term of 3 years in prison and a fine. His sentencing was scheduled for December 4, 2008.

(Reporting by Grant McCool)