Bayou’s Israel Seeks Release Saying Prison Almost Killed Him

May 08, 2014 12:01 am ET

May 8 (Bloomberg) -- Bayou Group LLC co-founder Samuel Israel, who faked his suicide and fled after pleading guilty to a $400 million fraud, seeks release him from prison claiming he almost died from poor medical care.

Israel, 54, claimed in papers filed yesterday in Manhattan federal court that he almost died of a chest infection in May 2013 as a result of “gross medical malpractice” at the North Carolina federal prison complex where Bernard Madoff is also a prisoner. Israel said the prison retaliated against him and unjustifiably withheld pain medication after he scraped off and ate a prescription pain-medication patch.

Israel founded Bayou in 1995 with James Marquez. After the company lost money in 1998, Marquez and finance chief Daniel Marino created a phony accounting firm to serve as the company’s external auditor, Israel said when he pleaded guilty in 2005. Rather than disclose modest losses, Bayou reported profits, Israel said. Bayou filed for bankruptcy in May 2006.

Israel is asking U.S. District Judge Colleen McMahon to reconsider the 22-year prison term she gave him based on the actions of prison officials. Israel is confined in a low- security prison in the complex in Butner, North Carolina.

In addition to the prison sentence, Israel was ordered to pay $300 million in restitution.

Israel, on the day he was to report to prison in 2008 to serve 20 years for the fraud, faked his death by abandoning his car on a New York bridge with the words “suicide is painless” written on the windshield. Israel, who was taken into custody after 23 days on the run, was sentenced to an additional two years. He’s due to be released in September 2027.

Time Served

Israel asked McMahon to set aside his sentence based on his treatment at Butner and resentence him to the time he’s already served.

The Federal Bureau of Prisons didn’t immediately respond to a voice-mail message after regular business hours yesterday seeking comment on Israel’s claims.

Israel said he has a disorder that causes his heart to beat too slowly. He also suffers from a degenerative spine condition, chronic pain and depression, he said.

On April 17, 2013, Israel passed out and hit his head after prison officials waited too long to schedule him to have the battery replaced in his pacemaker, he said. After surgery to replace the battery, prison medical officials failed to remove sutures from his chest and the site became infected, he said.

‘Gravely Ill’

By May 18 Israel was “gravely ill” from the infection. Three days later, doctors at the University of North Carolina Medical center removed the pacemaker. Israel remains without a pacemaker and in danger from his heart condition, he said.

Israel “must sometimes jump up and down to elevate his heart rate so that he will not lose consciousness,” he said in the court filing.

On June 3, suffering from extreme pain, Israel scraped off a patch containing a powerful pain medication, fentanyl, and ate it in what he termed “an isolated act of desperation.” He was later isolated in the prison’s special housing unit for more than 100 days. And prison medical staff removed Israel from the fentanyl and methadone they were using to treat his pain, he said.

Madoff, 76, who admitted orchestrating the biggest Ponzi scheme in U.S. history, is serving a 150-year sentence in Butner’s medium-security prison.

The case is U.S. v. Israel, 05-cr-1039, U.S. District Court, Southern District of New York (Manhattan).