Portus co-founder's hand in ‘cookie jar

Date: Thursday, June 23, 2005
Author: PAUL WALDIE- the globeandmail.com

Boaz Manor, the embattled co-founder of Portus Alternative Asset Management Inc., tried to move $35-million (U.S.) of client money out of a bank account in the West Indies earlier this month, court documents show.

The documents indicate that the money appeared to be destined for a bank in Switzerland. “We've got significant amounts of evidence pointing that he is directing the flow,” said Robert Rusko, an accountant at KPMG LLP, the court-appointed receiver for the insolvent hedge fund company. Mr. Rusko said the money has been frozen in a bank in the Turks and Caicos Islands.

Toronto-based Portus was forced into receivership last March by the Ontario Securities Commission, and KPMG has been trying to recover about $800-million (Canadian) in assets. The receiver has also asked the RCMP to launch a criminal investigation, but so far the police are still reviewing the case.

Mr. Manor left for Israel shortly after an Ontario court issued an order compelling him to co-operate with KPMG. He has denied any wrongdoing through his lawyer. He has also agreed to be interviewed by KPMG in Israel, but he has not arranged a date because of an illness, which has not been disclosed publicly.

About $52-million (U.S.) of Portus assets came from international clients located mainly in Asia and Canada. KPMG alleged that Mr. Manor personally handled the investment of that money and transferred all of it offshore through a series of bank accounts and trusts located in the Caribbean and Europe.

The receiver has alleged Mr. Manor misappropriated $3.1-million of that money and used part of it to pay for a lawyer in Israel. Another $14-million is missing.

Yesterday, KPMG won a court order compelling Mr. Manor to account for all the money in the international accounts.

“We have caught him with his hand in the cookie jar,” John Finnigan, a lawyer representing the receiver, said during a brief hearing in the Ontario Superior Court.

“The issue now is whether he is up to his wrist, elbow or shoulder.”

A letter from Mr. Manor's lawyer sent last week indicated that he planned to invest $35-million of the international clients' money, into a series of five-year notes issued by French bank Société Générale.

KPMG said it contacted Société Générale and was told it “had no knowledge of their alleged intended participation in any such investment,” according to a report filed in court.

The French bank said a term sheet describing the notes was forwarded to a bank in Switzerland “pursuant to a request made on June 7, 2005.”

The transaction never went ahead.

Mr. Finnigan said that's just one example of Mr. Manor's recent attempts to transfer client money.

The lawyer referred to a letter sent to him last Friday from a law firm in Turks and Caicos that said Mr. Manor had been in touch with the firm about Portus accounts in that country.

“Mr. Manor has been busy,” Mr. Finnigan told the court.

He said the receiver has obtained orders in several countries freezing Portus assets.

He said more orders will be sought in other countries, but declined to say where.

The Ontario court also issued an order yesterday compelling Thomas Ross (T.R.) Anthony Malcolm to co-operate with KPMG. Mr. Malcolm, a Montreal lawyer, is listed as a contact person on two of the largest offshore trusts.

Meanwhile, a class action against Manulife Financial Corp. over the Portus debacle has been dropped. The insurer's brokerage arm, Manulife Securities International Ltd., referred about 6,600 clients to Portus.

Manulife has offered to reimburse those clients for their Portus investments, which totalled about $235-million (Canadian).

As a result of Manulife's offer, lawyers who filed a class action against the company formally withdrew the suit yesterday.