Sam Israel’s $250 million fraud and fake suicide are still leaving casualties. Now his defrauded Bayou Hedge Fund investors are trying to recoup some of their long-gone cash by going after Goldman Sachs (GS).
As the prime broker for Bayou, Goldman had a view of all Israel’s trades. And despite numerous inconsistencies in Israel’s reporting, the bank never intervened (NYT):
From August 1999 to August 2005, Bayou had losses of more than $88 million — a figure disclosed as a line item under “year-to-date profit or loss” on the Goldman statement.
But Goldman knew that Bayou was reporting significant gains to investors, the suit charges….
In early 2004, Bayou provided materials to Goldman that claimed it had earned a return of almost 18 per cent since its inception — a figure the suit says was “completely inconsistent with the actual returns the Bayou Funds had been realising in their trading accounts at G.S.E.C., in which they had done nothing but lose money.”
Bizarrely, the lawsuit only seeks $20 million from Goldman. Let’s see if that even covers legal fees.
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