Portus matter referred to RCMP, extradition from Israel not possible: counsel

Date: Friday, May 20, 2005
Author: Gary Norris- Canadian Press

TORONTO (CP) - The receiver in the Portus Alternative Asset Management crash has reported the matter to the RCMP but there appears to be no way to force a key figure in the hedge fund group to return to Canada from Israel, according to legal counsel representing investor interests.

A letter from law firm Fraser Milner Casgrain to Portus Group investors made public Thursday acknowledged that "it may appear to the outside observer that (calling in the Mounties) was somewhat slow in occurring," but receiver KPMG needed to gather all facts to make accurate disclosure to the police.

"Whether or not criminal proceedings will actually be brought is now in the hands of the authorities."

RCMP Supt. John Sliter offered the force's standard refusal to confirm or deny an ongoing investigation.

As for Boaz Manor, the 20-something co-founder and front man of Portus, the law firm said he appears to have left the country after KPMG had obtained court authorization to interview him.

"We know of no legal mechanism which exists to force Mr. Manor to return to Canada to testify which respect to the activities of Portus," Douglas Knowles of Fraser Milner Casgrain wrote.

"It is our understanding that Canada and Israel do not have any mutual extradition treaties that would cover matters of this nature."

Knowles added that KPMG "is taking steps to attempt to examine him," but Manor has been pleading ill-health.

At a court hearing Thursday, Justice Colin Campbell declined to order that the nature of Manor's condition be disclosed, but indicated that the health concerns appear real.

Portus collapsed in March amid investigations of its sales and compliance practices by securities regulators who had frozen its operations in February.

The firm had about 26,000 clients and more than $800 million in assets, some of which flowed offshore.

KPMG alleges Portus officials shifted $3 million from the company to an offshore private bank account in a "fraudulent conveyance" while the firm was under investigation by regulators.

Portus was formed three years ago, and at the time it was shut down its "fund-of-hedge-fund" products were said to be attracting $20 million a week in new investment.

KPMG has applied to have Portus declared bankrupt while the receiver continues to try to untangle its affairs - an effort which Knowles observed has been complicated because "the Portus structure is extremely complex, records have been destroyed and are, in certain cases, incomplete."

The letter added: "It appears that many of the funds received from investors by Portus may well have been co-mingled and it may not be possible to trace with certainty those funds into any particular investments."