January 29, 2008 / 8:23 PM / 10 years ago

UPDATE 1-Bayou ex-CFO sentenced to 20 years in prison

(Adds judge quote, details on restitution)

NEW YORK, Jan 29 (Reuters) - The former chief financial officer of defunct hedge fund Bayou Group was sentenced to 20 years in prison on Tuesday for his role in a scheme that defrauded investors of $450 million and led to the fund’s collapse.

The executive, Daniel Marino, pleaded guilty in September 2005 to conspiracy and three counts of fraud. At a hearing in U.S. District Court in Manhattan, Judge Colleen McMahon ordered him to begin serving the prison sentence immediately.

Bayou collapsed in 2005 after the discovery of multiple frauds by its managers. Its demise rocked the hedge fund world and led to calls for more oversight of these loosely regulated investments.

Marino is “as much a career criminal as any mobster or drug kingpin,” McMahon said at the sentencing.

Marino will pay restitution to be determined at a later date, the judge said. She said the amount would likely be at least $200 million.

The fund’s two founders -- Samuel Israel III and James Marquez -- have also pleaded guilty. Marquez was sentenced last week to four years and three months in prison and ordered to pay $6.25 million in restitution. Israel awaits sentencing.

In court papers, Marino’s attorney, Andrew Bowman, described him as a lesser participant in the fraud who never engaged in any trading activities himself.

Marino, 48, suffered from health and self-esteem problems, was socially isolated and was intimidated at Bayou by Israel, according to the lawyer. (Reporting by Martha Graybow; Editing by Brian Moss)

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