Fugitive fund manager surrenders

A hedge-fund swindler who set off a national manhunt when he faked his suicide to avoid reporting to prison rode his scooter to a small-town police station in Massachusetts on Wednesday morning and turned himself in while talking to his mother on his cellphone.

Authorities say Samuel Israel III showed up at the police station in Southwick after hiding out for the last three weeks in his RV. The U.S. Marshals Service had been in touch with his mother for several days as the feds zeroed in on her son.

Appearing in federal court in Springfield, Mass., on Wednesday afternoon, Israel said he needed medical attention and asked the judge that he be sent to the federal medical prison in Massachusetts where he was supposed to be serving his sentence. But the judge denied the request and sent him back to New York to face an additional charge related to his time on the run.

A call to Israel’s attorney, Lawrence S. Bader, wasn’t immediately returned. His mother refused comment.

The surrender was the latest twist in a bizarre saga that began June 9, when the 48-year-old Israel was to report to prison to begin serving a 20-year sentence handed down in April for his role in the collapse of Stamford, Conn.-based Bayou hedge funds.

Israel’s sport utility vehicle was found abandoned on a bridge over the Hudson River in suburban New York City with the words “Suicide is Painless” -- the theme song for the movie and television show “MASH” -- scrawled in dust on the hood.

Authorities scoured the river for a body and quickly determined that the suicide was all a ruse.

Prosecutors said Israel and two others scammed investors into putting $450 million into the hedge funds by announcing nonexistent profits and providing fake audits, and made millions in commissions on trades that lost money for investors. The case broke as hedge funds came under greater scrutiny from prosecutors.

Israel was charged Wednesday with failing to surrender to serve a federal sentence. That comes on top of the conspiracy and fraud charges that led to his prison sentence, and could lead to an increased sentence of up to 10 years.

In a separate development, federal prosecutors announced Wednesday that more than $115 million is available to pay back victims of the Bayou fraud.