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Portus's Manor to return home

Date: Friday, September 28, 2007
Author: Janet McFarland, Globe and Mail

After spending years battling Canadian investigators in Israeli courts, Boaz Manor wants to come home to face the music.

The co-founder of collapsed hedge fund Portus Alternative Asset Management Inc. is expected to return to Canada next week and will be arrested on 16 counts of fraud, money laundering, possession of property obtained by crime and obstructing justice.

Lawyer Brian Greenspan, who is representing Mr. Manor, said a deal has been struck between Canadian authorities and Mr. Manor's legal team, and he is expected to fly back from Israel next week.

A source said he will be arrested at the airport by RCMP officers and immediately taken for a bail hearing.

Mr. Manor, 33, has spent 2 years living in Israel, much of it waging a vigorous legal battle with Canadian investigators from KPMG, which is overseeing the receivership of Portus. He opposed their efforts to question him about Portus or recover $9-million (U.S.) of missing diamonds purchased with Portus funds.

At one point in the fight to avoid questioning, his lawyers filed a doctor's report in court explaining that he was in a "fragile" mental state and "cried like a little boy" during a psychiatric session.

Now, however, Mr. Manor has stopped fighting and has asked an Israeli court to lift a travel ban to allow his return to Canada.

Mr. Greenspan would not confirm Mr. Manor's arrival date, but a source said he is expected back on Tuesday.

Mr. Greenspan said yesterday that his client has not had a recent change of heart and always intended to return to face charges laid by the Ontario Securities Commission in 2005.

"He has litigated certain issues in terms of a civil process. There is no compulsion pursuant to the civil process," Mr. Greenspan said.

"Now he's charged with a criminal offence. And he has always made it perfectly clear to the investigating officials - and it was made perfectly clear to the Ontario Securities Commission - that once he was charged criminally or quasi-criminally that he was always going to attend at his trial."

An Israeli court barred Mr. Manor from leaving the country at the request of KPMG, which asked for the travel ban in 2005. An Israeli judge will be asked to approve a consent order this week to lift the ban.

Mr. Manor and Michael Mendelson, both co-founders of Portus, were charged Wednesday with multiple counts of fraud, money laundering and possession of property obtained by crime following a two-year investigation by the RCMP and Ontario Provincial Police.

The RCMP accused Mr. Manor and Mr. Mendelson, 41, of fraudulently using funds raised from Canadian investors to fund the operations of Portus - including paying management fees and salaries. The police allege investors were told their money was being invested in various securities, but much of the money was not invested as pledged.

Portus raised $750-million (Canadian) from 26,000 Canadian investors, and also managed about $53-million (U.S.) for 700 international investors.

KPMG senior vice-president Robert Rusko said Wednesday that the receiver is keen to see Mr. Manor return to Canada after he departed unexpectedly in 2005.

The receiver has not recovered about $17-million of Portus funds, including diamonds that Mr. Manor took with him to Israel.