Guy Lawson, Crown, 352 pages, $26

Lying came easy to Sam Israel, the Connecticut hedge-fund manager who faked suicide in 2008 to escape a 20-year prison sentence for running a $450 million Ponzi scheme. Within two years of starting the Bayou hedge fund in 1996, Israel, trader Jimmy Marquez and Chief Financial Officer Dan Marino began cooking the books to hide a 14 percent loss.

Confessing would have driven investors to withdraw their money, depriving the trio of the chance to show the world that the fund's Forward Propagation strategy -- a crazy-quilt of technical-sounding palaver and marketing -- worked. Though of course it didn't.

In "Octopus: Sam Israel, the Secret Market and Wall Street's Wildest Con," Guy Lawson tells two tales. One is a diligently researched, lively account of ambition gone bad. The other, in the book's second half, is a story of the con artist himself getting scammed in what reads like an episode of "The Twilight Zone."

The financial world, we read in colorful anecdotes from Israel, is a scam. Schemers abound, and treachery is a matter of degree. "I was the swami," Israel told Lawson in one of many riveting reflections on his wayward role as a financial wizard. "I made the money. I made something out of nothing. I could turn perception into reality."

Israel believed he could find a way out of the hole he'd dug for Bayou. Sure enough, salvation seemed to appear in the form of Robert Booth Nichols, a self-proclaimed ex-CIA agent with alleged ties to the Mafia, Hollywood, Ferdinand Marcos and the Iran-Contra affair. Nichols tells Israel that a cabal of insiders, nicknamed the Octopus, controls the global purse strings.

Israel, whose deceit and fake returns had led to more asset managers parking their money in Bayou, signs on for what turns into Sammy's Great Adventure as he struggles to make a quick couple hundred million dollars using Nichols's supposed connections.

The basic lesson: Self-delusion is loyal servant to an ego with something to prove and a penchant for the easy way out.

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