The Wall Street Journal-20080123-Bayou Conspirator Sentenced- Marquez Figured In Attempt to Lure Investors to Funds
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Bayou Conspirator Sentenced; Marquez Figured In Attempt to Lure Investors to Funds
A co-founder of several of Bayou Management LLC's hedge funds was sentenced to more than four years in prison in connection with a scheme to defraud investors in Bayou's funds.
At a hearing yesterday, U.S. District Judge Colleen McMahon in Manhattan sentenced James G. Marquez, 59 years old, to 51 months in prison, to be followed by two years of supervised release. He also was ordered to pay nearly $6.26 million in restitution.
"I made the terrible choice to take the easy way out when things started going wrong at Bayou," Mr. Marquez said. "My actions and inactions directly injured investors of Bayou."
Mr. Marquez, who left Bayou in 2001, pleaded guilty to a conspiracy charge in December 2006. He had faced 51 months to 60 months in prison under federal sentencing guidelines.
Mr. Marquez is expected to report to prison on April 21.
Prosecutors had alleged that Mr. Marquez conspired with Samuel Israel III, the Stamford, Conn., hedge-fund firm's ex-chief executive, and Daniel Marino, its former chief financial officer, between 1996 and October 2001 to induce investors to contribute to Bayou funds by misrepresenting that the money-losing funds were highly profitable. Mr. Marquez co-founded Bayou Fund LLC and Bayou Fund Ltd. with Mr. Israel, the government said.
The alleged fraud ballooned from more than $6 million when Mr. Marquez left the company to more than $400 million when Bayou Management abruptly closed in July 2005.
In September 2005, Messrs. Israel and Marino separately pleaded guilty to conspiracy, investment-adviser fraud and other charges in connection with a scheme to defraud investors through improper inflation of the value of Bayou's funds. They are awaiting sentencing.
