Portus's Boaz Manor in Canadian court for first time

Date: Wednesday, November 14, 2007
Author: Janet McFarland and Paul Waldie, Globe and Mail

Boaz Manor, co-founder of one of the largest failed hedge funds in Canada, set foot in a Canadian courtroom for the first time Tuesday to face criminal charges involving allegations he defrauded thousands of investors in Portus Alternative Asset Management Inc.

Mr. Manor, 33, co-founded Portus in 2003 but left for Israel shortly after the Toronto-based hedge fund company was forced into receivership by regulators in March, 2005. By then, the company had roughly 26,000 investors and nearly $800-million in assets.

In September, the RCMP charged Mr. Manor and co-founder Michael Mendelson, 41, with several counts of fraud, money laundering and possession of property obtained by crime. The pair have also been charged by the Ontario Securities Commission with violations of the Ontario Securities Act.

Mr. Manor has always insisted that he did nothing wrong at Portus. He arrived in Toronto Tuesday morning and surrendered to the RCMP after spending weeks negotiating the terms of his return.

During a brief bail hearing in an Ontario Court, Mr. Manor nodded and smiled at his parents. He was released on $250,000 bail, secured by his parents, and ordered not to communicate with about two dozen former Portus associates, including Mr. Mendelson.

Under the terms of his bail, Mr. Manor must report to the RCMP twice a week and is prohibited from leaving Ontario. He must also stay at his parent's home in Toronto.

Dressed in an open-neck black shirt and black pants, Mr. Manor looked relaxed during the 10-minute hearing and thanked the judge.

Mr. Manor's wife, Wendy Yu, had little to say about her husband's return to Toronto. “So?,” she said when contacted Tuesday. “I'm not feeling well. Thank you very much, okay. Have a good day.”

Bob Rusko, a senior vice-president at KPMG Inc., which is handling the receivership, said he was “pleased that Mr. Manor has been returned to Canada to face charges.”

The receiver has spent two years trying to track down investors' assets and alleged in court filings that Mr. Manor continued to divert client money after Portus was put into receivership.

KPMG has also alleged that Mr. Manor bought $9-million (U.S.) worth of diamonds with investor cash and went to court in Israel to force him to produce the gems. Mr. Manor has said that he doesn't have the diamonds.

The receiver also won an Israeli court order restricting Mr. Manor's travel. That order was lifted in October to permit Mr. Manor to return to Canada to face the criminal charges.

Tuesday, Mr. Rusko said the receiver will continue to pursue Portus assets “in Israel or elsewhere.”

KPMG has also alleged in court filings that Ms. Yu and her sister, Jieying, helped Mr. Manor buy the diamonds in Hong Kong.

Ms. Yu's sister also allegedly received a $1.1-million loan from Portus just before it went into receivership. She was also allegedly involved in an offshore trust and brokerage account connected to Portus.

None of those allegations have been proven. According to court filings, Jieying has told KPMG that the loan was repaid and that she was not aware of the significance of the offshore entities because she can't read or write English.

Mr. Mendelson's bail hearing is scheduled for next week.