Global manhunt under way for hedge fund fugitive

Losses and Lawsuits

NEW YORK - The hunt for Samuel Israel, who failed to report to a Massachusetts prison to begin a sentence for defrauding more than $400 million from hedge fund investors, has reached a critical stage. When Israel's abandoned car was discovered on the Bear Mountain Bridge over the Hudson River with "Suicide is painless" scrawled on the hood, New York state authorities believed they faced a suicide investigation. Security camera footage failed to determine what happened next, and it is now believed that Israel's suicide bid was staged, making the US marshals, FBI and New York state police investigation now a manhunt.

The FBI has notified its legal attaches at its foreign bureaux and police forces abroad, as authorities face the possibility that Israel could already be abroad and in a country without an extradition treaty with the US. Authorities have issued wanted posters and a warrant for his arrest, and are now tapping telephones, tracking Israel's accounts and treating relatives abroad as potential accomplices. Authorities say a common reason why fugitives surrender is lack of finances, which may not present a problem in Israel's case.

Israel was sentenced earlier this year after pleading guilty to conspiracy and fraud charges in September 2005. Israel founded asset manager Bayou Management in 1996. His former chief financial officer, Daniel Marino, is already incarcerated and serving a 20-year sentence at an Arkansas state prison for his part in the $400 million fraud.