Before Bernard Madoff and his $65 billion Ponzi scheme, there was the little matter of a fraudulent hedge fund manager, Samuel Israel III and his Bayou Group firm. While the investor loss wasn’t as large – about $400 million – the Bayou Group saga, with Israel’s faked suicide and flight from the law, was surely more colorful.

Now, another part of that saga has come to a close.

Hedge fund investment advisor firm Hennessee Group has agreed to a settlement in a Securities and Exchange Commission investigation stemming from the Bayou Group fraud. The SEC charged that Hennessee recommended Bayou Group to investors without doing the proper due diligence.

Hennessee Group and its founder, Charles Gradante, were ordered to pay about $715,000 to pay back its fees plus interest, and $100,000 in penalties.

In settling the civil case, Hennessee and Grandante neither admitted nor denied the SEC charges.

Gradante could not be immediately reached for comment on the settlement. The SEC claimed that investors placed more than $65 million with Bayou Group from 2002 to 2005. Hennessee, the agency said, collected more than $500,000 in advisory fees.

Hennessee, however, didn’t perform the kind of due diligence they claimed to in their promotional materials, the SEC said. Most critically, Hennessee failed to verify Bayou Group’s relationship with its auditor, even after Israel gave them different names for the auditor. The investment advisor also failed to follow up on investor emails that questioned the relationship between Bayou Group’s cofounder Daniel Marino and the auditor.

It later turned out that Marino and Israel set up a fake accounting firm and that Marino signed the phony audits.

Marino is serving 20 years in prison for his role in the scheme. Israel also received a 20-year jail sentence, but he faked his suicide and disappeared the day he was supposed to report to prison. He later turned himself in and is waiting to be sentenced for his escape.