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Saturday, June 6, 2020

Portus update

Date: Monday, December 12, 2005
Author: news.independent

A founder director of Langbar International, the AIM-listed cash shell at the centre of a fraud investigation, has been interviewed by Italian prosecutors who are looking into the collapse of a Canadian hedge fund. Jean-Pierre Regli has been a director of Langbar since its 2003 float and lives in Lugano. In the company's prospectus, he is described as a Swiss and Italian citizen with 18 years' experience in the securities industry, asset management and private banking. He started his career with Merrill Lynch and has been on the board of several Swiss banks. Mr Regli was interviewed by a Milan prosecutor in September about Portus Alternative Asset Management, which at one point held more than $750m on behalf of 26,000 investors. The Swiss banker, who is still a director of Langbar, has been co-operating with Italian authorities looking into how missing money from Portus has ended up in local bank accounts. The Toronto-based hedge fund management company is accused of illegally diverting more than $87m in commissions, referral fees and other expenses. These commissions and fees were found to be so high that it would have been impossible for its clients to make a positive return. Mr Regli's lawyers have not returned Small Talk's calls over the past few weeks to discuss his meeting with the Italian authorities. Portus was founded three years ago by Boaz Manor and Michael Mendelson, and quickly became one of the fastest growing hedge fund managers in the country. But in February this year things started to fall apart as the Canadian regulator prohibited the hedge fund from trading securities and, soon after, KPMG was appointed as receiver to the asset manager. A criminal probe is now being conducted by Canadian police. KPMG has found it difficult to figure out where all the investor money has gone. It has not been helped by a lack of access to Mr Manor, who now lives in Israel and has said through his lawyers that he is too ill to co-operate. Separately, in London, the Serious Fraud Office continues to investigate a possible fraud at Langbar, once AIM's biggest cash shell, after a search by forensic accountants from Kroll Associates failed to find the whereabouts of the company's £365m cash pile.

From Tuesday's Globe and Mail

Boaz Manor faces being thrown into an Israeli prison Wednesday if he doesn't turn over more than 100 diamonds he allegedly bought using funds from his former company, Portus Alternative Asset Management Inc.

Mr. Manor, who co-founded Toronto-based Portus, left for Israel shortly after the hedge fund company was forced into receivership last March amid a flurry of investigations, which now includes an RCMP probe.

The receiver, KPMG Inc., has gone to court in Ontario and Tel Aviv to force Mr. Manor to co-operate in its efforts to track down more than $800-million of investors' money.

Through his lawyers, Mr. Manor has denied any wrongdoing and said he cannot co-operate because of “mental health problems.”

KPMG alleges Mr. Manor bought the diamonds, including one 22-carat stone, last summer using $8.8-million (U.S.) of Portus money.

The receiver asked an Israeli court for an order to force Mr. Manor to turn over the gems. On Sunday, Judge Shmuel Baruch gave Mr. Manor until Wednesday to produce the diamonds.

“Should he fail to do so a new motion will be submitted and it should be clarified at this stage that I would instruct for his imprisonment,” Judge Baruch said, according to a translation released by KPMG.

The length of any jail term would be at the judge's discretion, under Israeli law.

Mr. Manor's Israeli lawyers had unsuccessfully sought to have an earlier order to deliver the diamonds to KPMG's local lawyer, David Tadmor, quashed and Mr. Tadmor removed as the Israeli receiver. Mr. Manor's legal team is expected to appeal the ruling with the aid of a sworn affidavit from their client on the whereabouts of the diamonds.

“Obviously we will be pushing this issue quite firmly because we want him to disgorge the diamonds,” said Bob Rusko, a KPMG partner in Toronto who is overseeing the receivership.

Mr. Manor has also appealed other Israeli court orders compelling him to submit to an interview. Mr. Rusko was planning to interview Mr. Manor last week in Israel but his lawyers filed an appeal, forcing another delay. “We're cautiously optimistic that he's running out of alternatives to delay this process,” Mr. Rusko told reporters on Monday.

The receiver did manage to interview Mr. Manor's wife, Wendy Yu, Monday in Toronto. KPMG has alleged that Ms. Yu helped arrange the diamond purchase with her sister, Jieying, who lives in Hong Kong. The receiver won an Ontario court order last week compelling her to be interviewed by KPMG.

The receiver has interviewed Jieying in Hong Kong, and she confirmed she picked up several packages from a gem dealer last June and July. However, Jieying told KPMG that she did not know the contents of the packages and turned them over to an unnamed individual on Ms. Yu's instructions.

Ms. Yu has remained in Toronto since the collapse of Portus. She runs an art business north of Toronto called Fine Art Imports Inc. Jieying is listed as a director of the business. Ms. Yu told The Globe and Mail recently in an e-mail that she has nothing to hide and is willing to co-operate with KPMG.

She is supposed to leave Wednesday for Israel. Mr. Rusko said Ms. Yu has obeyed a court order to submit to an interview, and there is nothing to stop her from leaving. “I guess we'll have to see the results of the examination,” he said. “Otherwise I don't think there is any impediment for her to travel.”

Carolynne Wheeler is a freelance writer based in Jerusalem.