Hedge fund cheat: I really tried 'to do myself in'

NEW YORK (AP) -- The hedge fund cheat who faked his death before going on the lam told a Manhattan judge Thursday that he tried to kill himself with a drug overdose before he surrendered in Massachusetts.

The unsympathetic judge replied that Samuel Israel III, who scammed nearly half a billion dollars from investors, must forfeit his $500,000 bail.

Israel went on the run June 9, when he was supposed to report for a 20-year prison sentence. He abandoned his SUV on a bridge north of New York City with the phrase "Suicide is Painless" scrawled in dust on the hood.

The massive manhunt ended Wednesday, when Israel rode a scooter to surrender at a Massachusetts police station.

He could face an extra 10 years if he is convicted of a new charge of failing to report to prison.

Israel told U.S. District Judge Colleen McMahon that he had decided to commit suicide on Tuesday by swallowing morphine tablets and the painkiller fentanyl.

"I ate the balance of my fentanyl patches because I thought it was better to do myself in than to turn myself in," Israel said. "I woke up battered and bruised and I realized God didn't want me to do that and I turned myself in."

"Stand up, Mr. Israel," McMahon sternly told the defendant, who had abruptly sat down while she was speaking. "If you can ride a motorcycle, Mr. Israel, you can stand up in my courtroom."

The beginning of the end for the financier on the run came when he reached out to his sister-in-law. She then called his mother, who in turn called a man she had grown to trust at the U.S. Marshals Service.

Israel told his family early Wednesday that he was considering surrendering.

His mother asked Ed Farrell, a supervisory inspector on the U.S. marshals' Fugitive Task Force in Chicago, to promise her son's safety.

"I said, 'We'll assure his safety,' " Farrell said.

Minutes later, the bearded Israel walked into a small-town police station in Massachusetts and surrendered while talking to his mom on his cell phone.

"It was great," Farrell said. "The best part is it was resolved peacefully." Watch how the arrest unfolded »

Israel was sentenced in April for conspiracy and fraud. Prosecutors said he and two other men scammed investors into putting $450 million into hedge funds by announcing nonexistent profits and providing fake audits, and made millions in commissions on trades that lost money for the investors. The total loss to investors was about $300 million.

After authorities found Israel's SUV, they scoured the river for a body and quickly determined that the suicide was a ruse -- that Israel fled in his white recreational vehicle with a scooter and his belongings. He was thought to be staying at RV parks, campgrounds or highway rest areas. Authorities also arrested Israel's girlfriend on charges that she helped her lover elude the government.

Israel did not have a lawyer with him at his court appearance Wednesday. His lawyers did not return phone messages. His mother refused to comment when reached at her home in Illinois.

Frank Dawson, a U.S. Marshals Service spokesman in Boston, said Israel "knew they were getting close to him, so he probably did the right thing."

Israel's RV was found in Granville, Massachusetts, officials said. He had planned to surrender there, but the town's part-time police department was closed, so he rode a motor scooter to nearby Southwick to turn himself in, authorities said.

Israel walked into the police station wearing a T-shirt and shorts, identified himself and said he was a fugitive wanted by the federal government, officials said.

"He was polite, very contrite and a perfect gentleman at all times," Southwick police Officer Paul Miles said.

It was a humbling fall for Israel, who once enjoyed the glamour of an investment banking and hedge fund career that gave him a home in the playpen of the rich. He once rented a house from Donald Trump for $32,000 a month.

Complicating Israel's time on the run were his medical problems. He has had nine back surgeries, wears a pacemaker and is addicted to painkillers, according to prosecutors.

His ailments -- along with 2½ years of cooperating with authorities -- helped him get less than the maximum 30-year sentence. Judge Colleen McMahon also granted him two months to surrender to prison after he was sentenced.

Farrell, of the Marshals Service, said he had met with family members who live in the Chicago area to encourage them to help investigators if they were ever contacted by the fugitive.

He said he met for 2½ hours a week ago with Israel's parents, Ann and Larry Sr.

"It's more just garnering trust," he said. "You're a complete stranger saying, `You don't know me, but I want you to trust me."'

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