Sam Israel: Greed Is Good Part 1 | 227

Sam Israel was born into wealth, but he wanted to prove he could make it on Wall Street on his own. So he started a hedge fund – and almost immediately started losing money. But instead of admitting failure to his investors, he decided to lie. Eventually those lies spiraled into a $450 million fraud, a faked suicide, and a wild descent into a secret world of black-ops and dangerous con men. In a last ditch effort to dig his company out of debt, Sam is going to bet everything on a venture so bizarre, so shrouded in secrecy, that it’ll make the fraud look rational by comparison. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Scaachi Koul?

  Audible subscribers can listen to all our episodes of Scamfluencers ad-free right now. Join Audible today by downloading the Audible app.

• 0:08Sarah Hagi?

  A heads up for our listeners. This episode contains mention of suicide and drug abuse. Please listen with care.

• 0:20Sarah Hagi?

  Sarah, we've been doing this show for four years now, but let me ask you this. Do you know what a hedge fund does? That is such an amazing question. It's one of those things that like you learn about it and you know about it for two hours and then you have to relearn it.

• 0:38Scaachi Koul?

  Yeah.

• 0:38Sarah Hagi?

  But listen, I'm going to go real literal here and say it's a fund.

• 0:43Scaachi Koul?

  Hmm.

• 0:44Sarah Hagi?

  And it's a fund people use to invest and put their money in and it makes them money.

• 0:50Scaachi Koul?

  That was actually better than I thought you were going to do because I feel like I still don't understand the specifics of this job. But like if anybody tells me they're a hedge fund manager, my first instinct is to groan. I just know it's one of those jobs that is vague on purpose. Uh, that's a really generous way to put it. Well, today we have the scam artist hedge fund manager to end all scam artist hedge fund managers in a two-parter that'll take us so deep into conspiracy theory that you too may start questioning what's real and what isn't.

• 1:27Scaachi Koul?

  It's a scorching day in upstate New York in June 2008 and 48-year-old hedge fund manager Sam Israel is feeling the heat. He was recently given a 20-year sentence for fraud and today he's supposed to turn himself into prison in Massachusetts. But instead, he's driving his GMC Envoy in the opposite direction towards Bear Mountain Bridge in the Hudson Valley. He grips the wheel tightly as he pulls over to the shoulder, right in the middle of the high-suspension bridge. Sam steps out of the car. He's in his late 40s, bald with big brown eyes. He was an energetic, athletic jokester as a young man, but now he's worn out, in pain, and more stressed than he's ever been in his life.

• 2:11Scaachi Koul?

  He leaves the keys and the ignition and a bottle of pills he takes for chronic back pain on the seat. On the dashboard, a bobblehead of Stewie, the evil baby from the Family Guy cartoon, nods frantically. Then Sam writes the phrase "suicide is painless" in the dust on the hood of his car. Sarah, do you recognize that phrase?

• 2:32Sarah Hagi?

  Is it from like a movie or something? Sounds familiar.

• 2:36Scaachi Koul?

  Yeah, it's from MASH, that Robert Altman movie. Sam's heart must be pounding as he walks towards the edge of the bridge and peers down at the Hudson River below. It's almost 160 feet to the bottom. He could just jump and be done with it all. It's not like he can look his kids in the eyes after everything he's done. He scammed hundreds of investors out of more than $450 million. And now he's facing 20 years behind bars and he just can't do it. But he can't end his life either. So he's come up with a plan. He's going to make it look like he killed himself and then go on the run.

• 3:19Sarah Hagi?

  You know, I could see how this could work for a regular person perhaps, but if you're facing that time for a crime like that, the investigation's going to be very rigorous, so you better have a good plan.

• 3:31Scaachi Koul?

  Yeah, well, we'll see if a guy with a Stewie bobblehead has what it takes. Sam steps away from the edge and walks to an RV he parked at a nearby rest area. And then he gets in and starts driving. Sam thinks he's buying himself time to figure out a way out of this mess, but every time he tries to dig himself out of a hole, he finds an even deeper one. His faked suicide will soon lead to an international manhunt with his mugshot on America's Most Wanted. And when Sam finally has to answer for his crimes, he'll reveal a whole other layer of fraud and deception. A shadowy underworld of questionable characters who drew Sam into a web of conspiracy and lies.

• 4:18Speaker 02

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• 5:04Speaker 03

  I'm Gemma Whelan, and in the new season of The Spy Who, we tell the story of the original femme fatale, the spy who was Mata Hari. A famous dancer turned World War I secret agent accused of seducing Allied officers to uncover their plans. But was she a temptress or a scapegoat for French failures? Follow The Spy Who now, wherever you listen to podcasts. You can also listen to the full season of The Spy Who Was Mata Hari early and ad-free on Audible.

• 5:36Scaachi Koul?

  From Audible Originals, I'm Sachi Cole.

• 5:39Sarah Hagi?

  And I'm Sarah Haggie.

• 5:40Scaachi Koul?

  And this is Scamfluencers.

• 5:51Scaachi Koul?

  Sam Israel was born into wealth, but he didn't want to ride his family's coattails. He wanted to prove he could make it on Wall Street on his own. So he started a hedge fund. And when it started losing money, Sam made a choice. Instead of admitting failure, he lied to his investors, to his family, to everyone. Those lies spiraled into a $450 million fraud, a faked suicide, and a wild descent into a world of secret black ops and dangerous con men. Sam chased increasingly insane schemes to dig himself out, with each one just pulling him in deeper. It's a Russian nesting doll of scams, and at the center of it is a man who will do absolutely anything to avoid admitting that he's a failure.

• 6:36Scaachi Koul?

  This is Sam Israel, Greed is Good, Part One.

• 6:44Scaachi Koul?

  To understand how Sam Israel came to be one of the most deluded and elusive figures on Wall Street, we need to go back a few decades. It's June 1978 and Sam is 18. He's five foot 11 with a cherubic face and a goofy smile. He just graduated from an elite prep school outside of New York and is spending the summer before his freshman year at Tulane, training to play college football and having some fun. Sam loves to drink, which makes him perfect for this gig, bartending his uncle's garden party. As he mixes cocktails, he notices that most of the guests are rich finance types. These are the people Sam wants to get in with. Sam wants to make money, but he doesn't want to work for the family business, commodities

• 7:29Scaachi Koul?

  trading. Sam's grandfather made millions importing coffee, cocoa, and rubber. Sam's dad went to work for the company, and it's expected that Sam and his two brothers will work there too. But Sam doesn't want to be a cog in the family machine. Plus, his dad's a tough guy to work with. He's ultra-demanding and a hothead. Sam wants to tackle the world of finance on his own. As he serves another G and T, he sees someone he's been dying to meet, Freddie Greber. Freddie is in his 30s and is known as the boy wonder of Wall Street. He's famous for starting his own hedge fund, which is still a pretty novel concept in the 1970s. It's a niche space for the uber-rich.

• 8:13Sarah Hagi?

  Yeah, this is how a lot of terrible stories begin. Meeting an impressive guy who runs a hedge fund. But yeah, I guess in the 70s, there wasn't an implication around it the way there is now.

• 8:25Scaachi Koul?

  Yeah, different beast. So when Freddie steps up to the bar and asks for a vodka cranberry, Sam knows this is his big chance. He introduces himself, and probably because he's in Israel, Freddie hands Sam his card and tells him to reach out. He may have just been being polite, but Sam's determined to make the most of it. So a few days later, Sam puts on his best suit and hops on a train to Manhattan. When he gets off the subway on the corner of Wall Street and Broadway, he gets an instant hit of adrenaline. The streets are crawling with men in flashy suits, secretaries, shoe-shine guys. The scent of money is in the air.

• 9:05Scaachi Koul?

  Sam walks up to one New York Plaza, a towering 50-floor skyscraper that's home to financial giants like Goldman Sachs and Morgan Stanley. It's also the home of Freddie's company, Frederick J. Greber and Company. Sam gets into the elevator and punches the button for the 30th floor. Now, Sam doesn't know anything about finance, and he does not have an appointment, but he gathers up the courage to ask the secretary for Freddie Greber. It takes Freddie a second to remember Sam, but when he does, Freddie smiles. The kid's got moxie. He sends him down to the trading room floor to see how everything works. It's a solid wall of people, everyone yelling and shoving and waving little tickets, fighting

• 9:50Scaachi Koul?

  their way to the phones lining the walls. It's loud, sweaty, and chaotic, and Sam loves it. This is where he meets Freddie's trading clerk, Phil Ratner. He's about 20 years older than Sam, short and overweight. Immediately, he starts to haze Sam. He tells him that he and the guys are starving and to go out and get them a couple of pizzas. Sam's on it in a flash, returning minutes later with a stack of eight pies. But the security guard at the door tells him there's no food allowed on the floor. Sam screams at the guy, telling him these pizzas are about to change his life and he's not taking no for an answer. When he looks over at Phil and his friends, they're cracking up.

• 10:33Scaachi Koul?

  He realizes it was a test, and apparently he passed because Phil asks him to come back the next day.

• 10:41Sarah Hagi?

  This LinkedIn ass story, like, and you passed the test to become the trader. Like, oh my God, I hate this shit. It's so stupid. It's like, hey, in order to get this job, you have to do something humiliating and debase yourself. You got it?

• 10:57Scaachi Koul?

  Yeah, well, I mean, maybe it did work because soon Phil offers Sam a summer job as a runner on the New York Stock Exchange. He spends his days sprinting paper tickets from one broker to another, and he could not be happier. Sam has finally stepped out of his family's shadow and onto the trading floor, ready to make a name for himself. He came here to learn how the market works, but he's about to get his first lesson in just how dirty the game can be.

• 11:27Scaachi Koul?

  In December 1981, Sam is in the middle of his senior year at Tulane when he gets a call from Phil. Phil's getting ready to retire, and he wants to train his replacement, and he wants it to be Sam. This is the call Sam has been waiting for. And while it'd be nice to hang a college diploma on his future office wall, he's not about to let this opportunity pass him by. So Sam quits school, packs up his car, and moves to New York. At this point, he's already given up college football after a bad injury. Several surgeries later, he's still in a lot of pain and on a steady stream of painkillers. Sam starts working as a messenger at the New York Stock Exchange. And even though he's working downstairs and Freddie's up on the 30th floor, Freddie takes

• 12:12Scaachi Koul?

  Sam under his wing. They have a lot in common. They're both fun and outgoing, and they love to party, which is a good thing because a big part of working in finance is whining and dining clients. Sam ends up going out four to five times a week, getting loaded most nights. Factor in the painkillers, and it's a wonder he's able to make it to work each morning.

• 12:34Sarah Hagi?

  I feel like for these kinds of male-centric jobs, going as hard as you can, being as drunk and irresponsible as possible is like, it shows that you fit in, you're a culture fit.

• 12:46Scaachi Koul?

  It's part of it, it's part of the job. Well, everyone always said that Freddie's a genius, and Sam soon finds out the secret to his success is insider trading. Sam accepts this almost immediately. It seems like this is just how things work on Wall Street, especially with hedge funds, which are virtually unregulated. Freddie is everything Sam wants to be: confident, powerful, and wildly successful. One morning, Freddie opens a magazine and points to a new Mercedes he likes. He spends the rest of the morning making enough trades to be able to buy it. By the end of the day, the keys are in his hands. Now, I should mention that many of these colorful anecdotes come from a series of interviews

• 13:28Scaachi Koul?

  that Sam gave for a book called "Octopus: Sam Israel, the Secret Market, and Wall Street's Wildest Con" by journalist Guy Lawson. It's a real page-turner, but Sam isn't always the most reliable narrator. He even says, quote, "I'm a proven liar. Don't believe anything I say." So we'll have to take some of these stories with a big grain of salt.

• 13:52Sarah Hagi?

  It's very clear that Sam has the loser gene that is pretty common in stories like this, where he's like a liar and also has these crazy stories about like, "And then we went drinking all night and all the girls liked me," or whatever, you know what I mean?

• 14:06Scaachi Koul?

  Yeah, we might not be able to trust all of these stories, but we can judge him on the lies that he chooses to tell. One thing is indisputable, though: Sam loved making money. The only problem: he cannot handle losing it. Freddie and the other seasoned traders have accepted that loss is a part of the game, but not Sam. Once after a bad trade, Sam drank so much, he passed out under his desk and wasn't found until the next afternoon. Afterwards, Freddie sat him down and told him, "You can't be a winner until you learn how to lose." He wanted to impress upon his protege the importance of accepting the bad with the good. Sam is about to find out that when you lose, the people you love are the ones who get

• 14:50Scaachi Koul?

  hit the hardest. It's 1984, and Freddie is in his office at One New York Plaza when Sam knocks at his door. He's here to introduce Freddie to his new fiancee, Janice McKurgan. Janice is blonde, blue-eyed, and very pretty. She and Sam are high school sweethearts, and according to Sam, she's everything he isn't: a straight A student, a rule follower, and an overall good girl. Freddie must see that Janice is in for some serious disappointment as the future Mrs. Israel. Remember, at this point, Sam is partying with coworkers most nights and abusing alcohol, weed, and painkillers.

• 15:34Scaachi Koul?

  So Freddie decides to give Janice a little reality check. He sits her down and warns her about what she's getting herself into. The hours required for Sam's job are not a normal nine-to-five. There are going to be a lot of late nights with clients, so if she doesn't want this kind of life, she probably shouldn't marry Sam. But Janice says she knows this, and she still wants to be with him. And I guess Freddie must have been like, "Well, I tried." Because the night before their wedding, he takes Sam out to a high-end brothel and offers him two or three women as a little wedding present.

• 16:08Sarah Hagi?

  Ugh, every time we get a detail like this, I'm not any less disgusted. How common and almost cliche this is. You know, it's one of those things, if you see it on TV, you're like, "Okay, we get it," but it happens!

• 16:23Scaachi Koul?

  It very much happens. And the next day, Sam marries Janice. They move into a modest prefab townhouse in Bronxville. Sam seems to believe he can live in both worlds, but it's not long before things start to go sideways. It turns out Janice isn't really ready to be a Wall Street wife. She wants nothing to do with Sam's financial world and keeps her distance from it. But Sam keeps on enjoying all the perks that come with his rising star: front-row seats to games, fancy dinners, expensive wine. This is also the mid-'80s, AKA the "greed is good" era. The stock market is booming, and Freddie and his young protege are raking in the dough.

• 17:08Scaachi Koul?

  They start commuting to work in a private helicopter, and Freddie watches as Sam acquires a taste for the finer things: luxury cars, first-class flights, five-star hotels. Around this time, Sam forms an alter ego that comes out when he's extra messed up: a superhero named Captain Proton who's fueled by coke and booze. Now, you may be wondering, is Sam actually good at his job? Or did he just get in at a time when the company was on an upswing? It's hard to say. But we do know that Sam is a good hang, and that seems to win over Freddie and his other coworkers. So around 1985, Freddie makes Sam a partner.

• 17:49Scaachi Koul?

  Everything on Wall Street moves fast, and when you're up, there's nothing better. But what goes up must come down. And in Wall Street, the down comes with a crash. It's October 19th, 1987, Black Monday. Sarah, what do you know about Black Monday?

• 18:09Sarah Hagi?

  Yeah, it was that iconic day the stock market really crashed, and it was like the biggest one-day percentage drop in history. And it wiped out like billions of dollars in the matter of hours.

• 18:21Scaachi Koul?

  Yeah, exactly. It was unprecedented and very scary. Everyone is panicking, everyone except Sam, because he actually made money today. Sam has been shorting the market for years, betting that stocks are going to fall rather than rise. He borrows shares, sells them, then buys them back later at a cheaper price and pockets the difference. And on Black Monday, this technique pays off big for Sam. He makes a huge amount of money. This gets Sam thinking that it might be time to strike out on his own. Freddie and the old guys are stuck in the past, but Sam? He's the future. For example, he wants to embrace computers instead of relying on runners sprinting trades

• 19:05Scaachi Koul?

  across the floor. With computers, the trades are instantaneous. Plus, Freddie's different after the crash. His confidence takes a big hit, and he never fully recovers. Sam knows that if you don't have confidence, you're done as a trader, which is part of the reason that in 1988, Sam decides to leave his mentor and work for other firms. At first, things go well. He's making money and becoming more confident as a trader. But in 1990, Sam and Janice have a baby girl, and Sam decides he needs more structure and a steadier paycheck. So in 1993, he gets a job as a trader with a company called Omega.

• 19:48Scaachi Koul?

  Omega is a hotshot hedge fund run by a former head of research for Goldman Sachs. According to Sam, working at Omega connects him with brokers who feed him all kinds of insider information. He knows it's illegal to trade on this information himself, so he gets an old broker friend to make the trades for him. And this backdoor trading creates a windfall for Sam in the form of literal bags of cash.

• 20:15Sarah Hagi?

  Insider trading is obviously considered a big deal. People go to prison for it. But it is crazy to me that like, there are all these things people do to not get caught that are still illegal. It just doesn't make any sense to me how people decide to like, create a new rule or go behind whatever regulator's back or their boss's back. And you're just like, how does it work? What are you doing?

• 20:37Scaachi Koul?

  "How does it work and what are you doing?" is the subtitle of our show. Well, in a little over a year, Sam claims to have made nearly $1 million. That is about $2.3 million today. He and Janice build a brand-new home in Westchester County, and he pays for everything in cash. And in 1994, they have a baby boy. The birth of his son motivates Sam to make another big life change. After only about 18 months at Omega, he decides to start his own hedge fund. It doesn't matter that he's still a relatively new trader, he believes he can do it. He also started working on his own computer program called Forward Propagation, which

• 21:19Scaachi Koul?

  he thinks will generate patterns and returns and give him an edge over other traders. Around 1996, Sam starts his own company, Bayou, named after his New Orleans roots. He runs it out of his basement, and he markets it as a small shop that makes significant returns on lots of small bets. And since the minimum investment to join Bayou was smaller than most hedge funds, he's able to attract individual investors rather than just big companies. This means Sam is working with individual investors and not just corporations. After just a few months, they double the fund's value from around $600,000 to a little over $1 million.

• 21:59Scaachi Koul?

  But Sam is in a hurry to be successful, and in that frenzy, he loses sight of what's most important: the truth.

• 22:14Speaker 04

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• 22:44Speaker 03

  Ghosts aren't real. At least, that's what journalist Tristan Redmond always believed. Sure, odd things happen in his childhood bedroom, but ultimately, he shrugged them off. Until he discovered that he wasn't alone, that everyone who lived thereafter him also had bizarre experiences they couldn't explain. And it gets even weirder. It just so happens that his wife's great-grandmother was murdered in the house next door. Is this ghost somehow connected to her murder? He decides to go where no son-in-law should, digging up a cold case and asking questions that nobody wants answered. Like, could his wife's great-grandfather have gotten away with the perfect crime? This is a podcast about family secrets, overwhelming coincidence, and the things that come back to haunt us.

• 23:29Speaker 03

  For the best bingeable series like Ghost Story, listen to the Audible True Crime Podcast wherever you get your podcasts. Audible subscribers can get all episodes early and ad-free right now. Join Audible in the Audible app or by subscribing on Apple Podcasts.

• 23:52Scaachi Koul?

  It's March 1996, and Dan Marino is sitting across the desk from Sam Israel at Bayou's headquarters. Let me clarify that this is not the famed football player Dan Marino. Our Dan Marino could not be more different. He's a short, awkward accountant from Staten Island who's in his late 30s, and he has big pick-me energy. Dan feels like he's won a big prize in getting hired at Bayou. Since the company is small, Dan works with Sam directly, and Dan's job is simple. He's supposed to reconcile accounts, pay the company's bills, and report back to Sam. 96 is a good year for finance. The market is taking off, fueled by the dot-com boom, and it seems like everyone is making money.

• 24:36Scaachi Koul?

  But pretty quickly, Bayou starts losing. Sam's inexperience as a trader leads him to make some pretty bad investments. So Sam asks Dan to do some creative accounting and move money around to make it look like Bayou is still profitable. It's not exactly illegal, but it's definitely projecting a false image of success.

• 24:59Sarah Hagi?

  Okay, correct me if I'm wrong, but is this not similar to what tech companies that haven't made money do? This is kind of valuation-vibed, in my opinion?

• 25:08Scaachi Koul?

  Yeah, this is where the "not technically illegal" part kind of cuts in.

• 25:12Sarah Hagi?

  Yeah.

• 25:13Scaachi Koul?

  Well, unfortunately for Dan, these accounting adjustments are just the beginning. Sam swears he's just covering their losses in the short term while he figures out a business plan. But a couple hundred thousand in losses quickly becomes over a million. And pretty soon, Bayou is sinking. As Dan sits across from his boss today, he tells him he can't keep covering up the losses. They're getting too big. But Sam delivers Dan the hard truth. As a new company, if they're honest with their investors about their losses, they'll have to fold. And while Dan doesn't like the deceit, he's not quite ready to give up on his dream. He sees Bayou as his chance at the big time, and he is desperate to make it work. So Dan keeps his mouth shut

• 25:58Scaachi Koul?

  as his boss continues to lie about Bayou's success. In May 1998, Bayou moves out of Sam's basement and into a big, fancy office in Connecticut right on the water. Sam claims that Bayou needs to project an image of success. And Dan shouldn't worry, because Sam is going to trade them out of debt real soon. Still, Dan is stressed. They're losing money and, at the same time, writing letters to investors saying the opposite.

• 26:27Sarah Hagi?

  You really have to wonder, how will he get himself out of this one? Like, how will Sam miraculously start making money? I'm scared to know how he will attempt to fix this.

• 26:39Scaachi Koul?

  Well, while he tries to find a fix, he starts acting more and more erratic. One day, out of nowhere, Sam threatens to fire Dan. Dan is heartbroken. All he's ever done is say yes to Sam. So he starts looking for another job. And then, just as abruptly, Sam tells him he's changed his mind. Dan can stay. It must have been disturbing to Dan to see how unstable his boss was becoming. Plus, Dan knows Sam's relationship with drugs and alcohol is getting worse. Dan wants to believe Sam knows what he's doing, but it's becoming clear that Sam is digging himself deeper into a hole. Still, Dan is willing to do whatever he can to keep his job,

• 27:23Scaachi Koul?

  even if that means shifting from small accounting adjustments to full-on fraud.

• 27:31Scaachi Koul?

  In December 1998, Sam calls Dan into his office for another meeting. He decides it's time to come clean with his accountant. He tells him that Bayou is in a financial hole they can't get out of, at least not legally. So it's time for a new plan. Up until now, Bayou has been using a big auditing firm to do their end-of-year audit. This year, Sam knows it'll show huge losses and Bayou will be dead in the water. So he wants to fire the big firm and use Dan instead. Since Dan is an independent accountant and not a partner at Bayou, it's legal for him to do this. But instead of using the real numbers, Dan can work some of his magic to make it look like Bayou's doing well,

• 28:15Scaachi Koul?

  which is another word for lying. Sam must have noticed that sweet, earnest Dan is starting to sweat. After all, this is a hell of an ask. It's not just moving around numbers, it's making them up. But to Sam's surprise, Dan says he's willing to do it under one condition. He wants Sam to sign a document and videotape a confession stating this is all Sam's idea and that he asked Dan to participate in the scam. Sarah, how do you think Sam took this?

• 28:49Sarah Hagi?

  Is Dan an idiot? Does he not realize he's the dispensable one in Sam's life? Not Sam? They're not in this together? I mean, that's laughable. It's laughable.

• 29:00Scaachi Koul?

  Yes, well, Sam does pretty much laugh in his face and tells him to go fuck himself. He says that Dan can play ball, or they can come clean with Bayou's real numbers and he'll be out of a job. Dan decides to drop the matter and signs on. Here's how it'll work. Sam will create performance numbers that match what they've already been telling Bayou's members. And Dan will create a fake auditing company to confirm those numbers. So, at the end of the year, Dan inflates Bayou's numbers to make it look like the company's grown to over $4 million. And then, Sam writes a letter to investors explaining that Bayou switched to a smaller accounting firm and that nothing else has changed. And no one questions it.

• 29:43Scaachi Koul?

  Sam knows he's committing fraud, but he's good at lying to himself. Sarah, can you read what Sam told Guy Lawson for his book?

• 29:51Sarah Hagi?

  Yes. He says, "In my life, I was not a liar and a cheater. I was doing things that weren't like me. It was like it wasn't even me who was doing all the cheating and lying."

• 30:04Sarah Hagi?

  I do believe he probably depersonalized a bit from the crimes he was committing, but also, this is classic scammer. There are so many ways I could think they aren't committing crimes, because it's like, well, I'll fix it all in the end, and everyone will be happy, and this person will gain from it too. But it's just like a lack of accountability in a way.

• 30:21Scaachi Koul?

  Yeah, fallacy of the greater good. While stories about Bayou's early success make the rounds, and new investors want in. And by 1999, the company has about $25 million in investments. Things are looking up, and Sam is convinced he'll make the money back. But in reality, he just started digging himself a multimillion-dollar grave.

• 30:47Scaachi Koul?

  At the end of 1999, Sam sits down to write a performance review letter to his clients. The S and P is surging, and Bayou has made 26% in returns, which would be very impressive if it were true. In reality, Bayou is continuing to hemorrhage money, and Sam is feeling the pressure. He's always used alcohol and drugs to cope, but now it's escalating. Sam's also experiencing chronic back pain, and the pain pills he takes start to impact his personality. He is no longer the lighthearted, easygoing guy he once was. Now, he's angry all the time and flying into rages, just like his dad used to.

• 31:30Scaachi Koul?

  Sam's drug and booze binges are getting hard to hide. One night, Janice pulls up to the house with the kids and finds Sam standing in the driveway. He's wearing a mishmash of sports equipment, swimwear, a cape, and Janice's bikini underwear.

• 31:49Sarah Hagi?

  When he previously said that it felt like someone else was doing it, that kind of does make a bit more sense now, considering the amount of drugs he was on, because this is beyond like, regular partying. He's just doing stuff he probably can't even remember.

• 32:02Scaachi Koul?

  Yeah, I don't know what this was. Maybe he was reprising his role as Captain Proton. Whatever he was thinking, Janice is not laughing. She's disturbed. Soon after, Sam is diagnosed as bipolar. His doctor puts him on a confusing mix of drugs, including an antidepressant, lithium, and Zoloft, all in addition to the painkillers he's already taking. Sam seems to be living two different lives. In one, he's a successful hedge fund bro and strong provider for his family. In the other, he's getting obliterated in order to deal with the mounting stress of losing millions of dollars. By the end of 2000, Sam tells investors that they've made around 20% in returns,

• 32:47Scaachi Koul?

  another total fabrication. Then, he finally gets a lucky break. His computer program, Forward Propagation, starts showing signs that the market is going to go up in a big way. This is the opportunity he's been looking for. So Sam takes a major gamble, and on a Friday, invests 95% of Bayou's money. He leaves the office confident that by the following week, he'll have made over $15 million. But then, that Tuesday comes, and it's September 11, 2001.

• 33:23Sarah Hagi?

  Stop. Oh my god. How... I was about to say, how is it always 9/11?

• 33:30Scaachi Koul?

  It's kind of always 9/11, yeah.

• 33:32Sarah Hagi?

  It is crazy. You know, a 9/11, a huge ripple effect throughout the world for many years, until now, but no one thinks of the scammers. No one thinks of what happened to the scammers when 9/11 hit.

• 33:47Scaachi Koul?

  It had a real impact, that's for sure. The market takes a legendary nosedive, and Bayou loses $35 million. Dan tells Sam they should close Bayou. This is their chance to get out. Everyone lost money, so no one would think twice about one more fund shutting its doors, or look too closely at their books. News of the closure would barely make any headlines. But that would also mean conceding that Bayou is a loser, something Sam is not willing to do. So instead, he writes to his clients, saying that although they suffered some losses, the fund is still up 7% for the year, which seems like a miracle, considering how much other hedge funds lost.

• 34:32Sarah Hagi?

  And people believe this? They think this guy is the most protected man in all of hedge funds, where nothing bad ever happens to him? Come on.

• 34:40Scaachi Koul?

  I mean, yeah. Word of this miracle spreads beyond Wall Street. Suddenly, everyone starts asking Sam for investment advice. Sam loves feeling like the godfather of the financial world. He's even more successful than his father. Plus, he's more impressive, because unlike his dad, he is self-made. Never mind the fact that it's all made up. By all appearances, Sam is a financial savior. But behind the scenes, his life is about to enter a tailspin. And the first thing to go? His marriage. It's the early 2000s, and Sam is riding high on his ego and on literal drugs.

• 35:24Scaachi Koul?

  But his wife, Janice, is miserable. Their marriage is a mess, and she doesn't recognize her out-of-control husband. Janice wants Sam to get sober, but Sam is totally dependent on drugs and alcohol, not just to party, but to cope with his chronic pain. In January, he undergoes major back surgery, but the surgery is a bust. All it does is get Sam addicted to new, even stronger, painkillers. He goes to rehab, but he immediately relapses. One day, Janice walks in on Sam snorting cocaine. Despite the $20 bill literally inserted in his nostril, he screams at her that he is not doing drugs. Another night, Janice asks Sam

• 36:09Scaachi Koul?

  if he's taken his urine test that day like he's supposed to. Instead of answering, Sam yells, "You want urine?" and then he unzips his pants and pees on the floor.

• 36:21Sarah Hagi?

  I mean, where's rock bottom for this guy? Because this is tough.

• 36:25Scaachi Koul?

  Well, this is the final straw for Janice. She leaves Sam and files a restraining order. Their kids are still young and have seen far too much. For good measure, she calls the police to have a protective order issued against him. He's given 20 minutes to pack up his things and leave the house. Sam has lost his wife and his home, but he refuses to admit failure. Instead of scaling back, he doubles down. And what'll come next will make everything before this look like a warm-up.

• 37:02Speaker 05

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• 37:33Speaker 06

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• 38:18Speaker 06

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• 38:34Speaker 07

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• 38:41Scaachi Koul?

  It's the winter of 2003, and Deborah Ryan is pulling up in front of a luxurious home in Bedford, New York. Deborah is a 40-year-old interior designer with shoulder-length blonde hair, blue eyes, and an understated classy presence. The house is being rented by Sam Israel, who recently separated from his wife. Deborah is here to decorate for Christmas. With the divorce looming, Sam wants the place to feel like home for the kids. Deborah knocks on the door, and Sam gives her a tour. She's used to working for rich people, but this is something else. A sprawling 13-bedroom estate, decked out with Grecian sculptures, a sauna, and an 800-gallon saltwater fish tank. Later, she'll learn that the house

• 39:26Scaachi Koul?

  was originally built for the Heinz family and then sold to Donald Trump, which, given the gold fixtures and general ostentatiousness, tracks. Sam's rent is $22,000 a month.

• 39:40Sarah Hagi?

  I can't imagine how ugly this home is. And I'm curious to see how Deborah will make it uglier.

• 39:46Scaachi Koul?

  Well, as Countess Lohan says, money cannot buy you class. Deborah appreciates that Sam is quirky and fun, not at all like the pretentious clients she's used to working with. He doesn't treat her like the help. And as she gets to know him better, she realizes that she looks forward to spending time with him. With Sam, she feels like a kid again. They stay up late in his bedroom watching marathon episodes of SpongeBob SquarePants.

• 40:14Sarah Hagi?

  I feel like a lot of times when women are having a great time with a terrible man, the good times are when he's acting kidlike.

• 40:21Scaachi Koul?

  Yeah, she's being mommy. She's having a good time being mommy.

• 40:24Sarah Hagi?

  Yeah.

• 40:26Scaachi Koul?

  Well, one afternoon, Sam grabs Deborah's hand. She's struck by the energy between them, and he kisses her. They end up sleeping together. Soon, Deborah is there constantly. She loves playing house with Sam. It means mornings with eggs and coffee, and evenings surrounded by his collection of exotic pets and the nonstop buzz of phones on every surface. It's chaotic, but Deborah likes it. They don't go out much because of Sam's back pain, but Deborah doesn't mind. The only thing that worries her is Sam's work stress. She starts to notice his work-life balance is nonexistent. He works mostly at night, like he's afraid to turn off, even to sleep.

• 41:08Scaachi Koul?

  Yet, at the same time, he's in a permanent fog. Then, he starts having full-blown panic attacks. He can't breathe or talk, and he ends up seeing a heart specialist who discovers he's at risk for a massive stroke. So Sam undergoes open-heart surgery and has a pacemaker implanted. Deborah is falling for a man who is literally falling apart. Worried about his physical and mental health, she does what any girlfriend would do in this situation. She sets him up with her psychic.

• 41:41Sarah Hagi?

  I do feel like knowing that in this terrible time, Deborah sets him up with a psychic, to me, it's like, oh, yeah, they do match because they just believe things will work out without trying in a practical way.

• 41:54Scaachi Koul?

  Yeah, maybe they're more fit than we thought. Well, Sam is reluctant at first, but he finally agrees to go. And the psychic tells him two interesting tidbits. One, a big financial opportunity will present itself in the next month or so. And two, a man named Robert is going to enter his life and have a big impact. Sam shrugs it off and tells Deborah, it seems like a bunch of BS. Prophecies aside, Bayou is still hemorrhaging money, and Sam remains desperate to find a way out. And he's about to find one, in the form of a dark, mysterious stranger who offers him a lifeline that seems too good to be true.

• 42:37Scaachi Koul?

  One night, Sam is eating Chinese takeout at home with a friend, venture capitalist Jack O'Halloran. The two men eat and talk about the market, as usual. But today, Jack's got some hot intel about a new kind of technology that's going to be the next big thing for Wall Street. And the guy who knows all about it is named Robert Booth Nichols. Sam must have choked on a wonton when he heard the name Robert. Was Deborah's psychic right? Jack tells Sam that Robert is black ops, a national security asset who's been doing the CIA's darkest work for decades. He's also apparently an illegal arms dealer, a mob associate, and a stone-cold killer.

• 43:22Sarah Hagi?

  I feel like Sam is going into dangerous territory. And in my mind, this is the darkest you can go is black ops and arms dealing.

• 43:32Scaachi Koul?

  Yeah, it's

• 43:33Sarah Hagi?

  It's like there's an iceberg and he's like really at the bottom there.

• 43:37Scaachi Koul?

  Yeah, it's pretty bad. Well, Sam Googles Robert, and hundreds of links come up. The guy is basically a conspiracy theory celebrity. As he scrolls, he reads that Robert has had his fingers in almost every shady government operation of the last 30 years. Iran-Contra, the October Surprise, MKUltra. And then Sam stumbles on an article about the technology Jack mentioned over dinner. Back in the 80s, the CIA secretly sold a computer program called Promise to banks and financial institutions, including the Federal Reserve. But what most people didn't know was that the program had a hidden backdoor, one that let the CIA quietly monitor financial transactions.

• 44:21Scaachi Koul?

  Sam's mind must be swirling. If he had a computer program like that, he could track the movement of money inside banks all over the world. And then he'd finally be able to make back everything he'd lost, and so much more. He could make trades ahead of the market. It would be the ultimate insider trade. Now, it's important to point out that Sam has always been susceptible to conspiracy theories. They probably made him feel better about himself. If the whole world was corrupt, his Ponzi scheme was just a drop in the bucket. I should also add that scam artists like Sam are often the ones who fall for other scams. It just comes down to pride. Sam believes he's the one pulling the strings, so he'd never fall

• 45:05Scaachi Koul?

  for someone else's scam. But in truth, he's more vulnerable than ever. Drug-addled, desperate, and at an all-time low.

• 45:16Sarah Hagi?

  I'm really fascinated by the way his mind works, because if I'm hearing that level of surveillance technology, I'm not thinking, oh, that's amazing. I should use it. I'm thinking, that's really scary. Not like, man, if I had my hands on that, just like the CIA, I could see what people are doing.

• 45:34Scaachi Koul?

  Listen, he comes by all of this nonsense, honestly. Clearly. Well, Sam is convinced that Promise is the answer to his prayers. So he goes back to Jack and says he needs to meet Robert. Jack arranges the meeting, which apparently has to take place in London. In April 2004, he flies out to meet the mysterious Robert. At the historic Dorchester Hotel in Mayfair, Sam finally comes face to face with the man he believes can save Bayou. They're sitting at a long glass table along with a few other men, including Jack O'Halloran and two engineers. Robert Booth Nichols does not disappoint. He's six foot three, with a gravelly smoker's voice that makes him sound like a P.I. out of

• 46:19Scaachi Koul?

  an old black and white movie. Sam is immediately taken in by his big stature and air of intrigue. This is exactly the kind of man who would hold the world's secrets in his back pocket. He even carries a gun in a shoulder holster. Sam says he wants to talk to Robert about Promise, alone. So Robert tells him to meet him outside the hotel in five minutes. Once there, Sam tells Robert he'll pay good money for the program. But Robert tells him to quiet down. They can't talk about Promise out in the open. He'll meet Sam back at his hotel.

• 46:54Sarah Hagi?

  Oh, my gosh, that is exactly the type of thing that makes someone like Sam feel very important.

• 46:59Scaachi Koul?

  Yeah.

• 47:00Sarah Hagi?

  I have private information for you, and we can't talk about it out in the open. Oh, he would eat that shit right up.

• 47:06Scaachi Koul?

  I mean, I would also say at this point, like, how many location switches are we gonna make?

• 47:11Sarah Hagi?

  Yes.

• 47:12Scaachi Koul?

  But for Sam, that only strengthens his belief that he's close to something big. Sam is too desperate to question if Robert is the real deal, or if he's just really good at faking it. He's a drowning man, and ready to grab the first hand that reached out. The question is whether it's pulling him up or dragging him under.

• 47:36Scaachi Koul?

  Sam makes his way to the Claridge Hotel to meet Robert. And inside, Robert gives Sam a slow once-over. Sam appears to be loaded and desperate, which makes him exactly the kind of guy Robert's been looking for. He has to sell Promise with just the right amount of intrigue. So he slowly opens up his briefcase, picks up a piece of paper, reads it, then quickly shuts it back inside the case. Sam asks what the paper is, but Robert brushes it off. It's nothing. But Sam presses, and Robert relents. It's the payout sheet from a trading program. Robert opens his briefcase again and hands Sam the sheet. Sam's eyes scan the huge

• 48:20Scaachi Koul?

  returns, and Robert can't help but smile. He's reeling Sam in slowly but surely.

• 48:29Sarah Hagi?

  Wow, it is so rare we get to see our main scammer get scammed.

• 48:34Scaachi Koul?

  Yeah.

• 48:34Sarah Hagi?

  You'd think he would know the signs, but it just shows how insanely desperate he must be.

• 48:40Scaachi Koul?

  It's almost gratifying. Well, Robert tells Sam that he's been trading bonds for the Saudi royal family and can do the same for him. But it's very difficult to get into this market. It's only open to the biggest players. Sam asks how he can get in. Robert tells him he needs $200 million. Sam says he doesn't have it, not personally, but he does have $150 million through his hedge fund. Robert takes a deep breath. He can work with that. Then Robert tells Sam to forget about Promise. He has better ways to put Sam's money to use. Because here's the deal. There's a secret government operating within the world's governments. They run a trading program that only an elite few have access to, and it's

• 49:25Scaachi Koul?

  called the shadow market. The proceeds are so massive that they're not only used to make people rich, but to fund wars, pay off foreign governments, and even build hospitals in developing countries. So not only would Sam be making millions, he would be part of an elite group literally shaping society.

• 49:46Sarah Hagi?

  This is astounding because it is so easily something that could exist in the shadows, and that like, no one would ever know about.

• 49:54Scaachi Koul?

  Yeah.

• 49:55Sarah Hagi?

  But also, why the hell would they want Sam, one? And two, it's exactly the type of thing that he could be like, but he told me about the shadow market and all this crazy stuff. And people be like, okay, so you're making that all up? Like, you know, it's like, there's no way to prove it or disprove it, so may as well believe in it.

• 50:12Scaachi Koul?

  Yeah, it literally could go either way. But Sam is in, way in. So Robert lays out the next steps. Sam has to wire all $150 million to a non-depletion account, which is an account that promises investors their money is safe. Robert tells him the account will remain in Sam's name, and no one will have access to the money other than Sam. At this point, Sam is no longer thinking about the fact that the $150 million he's gambling with belongs to other people. Real people. It's their livelihoods, their savings, their futures. He's just thinking about saving his own ass. So he tells Robert, it all sounds great. This is exactly what he's been

• 50:55Scaachi Koul?

  looking for. Robert must be euphoric, because this is exactly what he's been looking for, too. On April 14, 2004, Sam wires $150 million of Bayou's funds to an account at Barclays Bank in London. He hopes that this will save the company and put an end to years of lies. But this isn't the end of anything. It's just the beginning. Because this transaction marks the start of a parasitic relationship with Robert Booth Nichols, one that will transform him from predator to prey, and thrust him into a hall of mirrors that will cost him everything. His money, his reputation, and his sanity.

• 51:43Scaachi Koul?

  From Audible Originals, this is Sam Israel, Greed is Good, Part One, for Scamfluencers. I'm Sachi Cole.

• 51:51Sarah Hagi?

  And I'm Sarah Haggy. If you have a tip for us on the story that you think we should cover, please email us at [email protected]. We use many sources in our research. A few that were particularly helpful were Octopus, Sam Israel, The Secret Market, and Wall Street's Wildest Con by Guy Lawson, and long-form articles by Guy Lawson for The New York Times Magazine, Fund Manager Who Fakes a Suicide Surrenders by Abba Batani for The New York Times, and The Beauty and the Bandit by Karen Weinrebb from Marie Claire.

• 52:23Scaachi Koul?

  Alison Weintraub wrote this episode. Additional writing by us, Sachi Cole and Sarah Haggy. Rachel Engelmann and Olivia Bryle are our story editors. Our senior producers are Sarah Enni and Jimmy Bloom. Our associate producer is Charlotte Miller. Our managing producer is Desi Blaylock. Fact-checking by Gabrielle Droule. Sound design by James Morgan. Additional audio assistance provided by Augustine Lim. Our music supervisor is Stoff Alaskas for Frieze on Sync. Our executive producer for Audible is Jenny Lauer-Beckman. The head of creative development at Audible is Kate Nevin. The head of Audible Originals North America is Marshall Louis, and the chief content officer is Rachel Giatza. Copyright 2026 by Audible Originals LLC. Sound recording copyright 2026 by Audible Originals LLC.

• 53:12Scaachi Koul?

  Follow Scamfluencers on the Audible app or wherever you get your podcasts. You can listen to all episodes of Scamfluencers ad-free by joining Audible.