NEW YORK (CNN\/Money) – Investors in Bayou Group, whose top executives pleaded guilty to orchestrating a $450 million fraud Thursday, are undoubtedly wondering how they could’ve gotten sucked in by the Connecticut hedge fund shop.<\/p>\n
Founder Samuel Israel III and CFO Daniel Marino pleaded guilty to charges that they raised more than $450 million from investors, lied to them about the fund’s returns and formed a phony accounting firm to audit the firm’s results. State officials in Arizona had seized $100 million in funds believed to belong to Bayou’s investors, according to court documents. (Full story<\/a>).<\/p>\n Typically, when authorities uncover hedge fund fraud, the investors turn out to be individuals who often don’t have the tools they need to weed out underperforming or potentially criminal managers.<\/p>\n