Wednesday, July 2, 2008

Fugitive hedge-fund swindler surrenders in Mass.

A hedge fund swindler who set off a national manhunt when he faked his suicide to avoid reporting to prison surrendered Wednesday to Massachusetts police after three weeks in which authorities suspected he was hiding out in RV parks and highway rest areas. Authorities say his own mother helped broker the surrender.

Samuel Israel III, 48, walked into the police station in Southwick, Mass., at about 9:15 a.m. wearing a colored T-shirt and shorts, identified himself and said he was a fugitive wanted by the federal government, officials said.

Prosecutors said he and two other men scammed investors into putting $450 million into the funds by announcing nonexistent profits and providing fake audits, and made millions in commissions on trades that lost money for the investors. The collapse of the funds prompted calls for stricter oversight.

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