The report says that to date, about $662.15 million (Canadian) and about $37.2 million (U.S.) have been found and secured in 130 Portus bank and investment accounts in Canada, the Turks and Caicos and the Cayman Islands, out of more than $800m that was collected.

The majority of Portus assets remain tied up in notes issued by France's Société Générale which were purchased for $529-million, and mature between 2008 and 2011.

Although all investor funds were supposed to be invested by Portus, KPMG says on average 13.3% or roughly $90m was deducted from the BancNote Trust and BancLife Trust Investor Funds and used to pay management fees, performance fees, referral fees, trailer fees, managed account redemptions, undetermined fees and to generally finance Portus operations.

Portus failed to purchase Canadian securities on behalf of BancNote Trust and BancLife Trust managed accounts as outlined in the offering memorandum. According to the report, LOM Holdings Ltd., an offshore trading firm based in Bermuda, made book entries showing money or shares being transferred on behalf of Portus; but the report says no securities were actually traded on the market. Portus also failed to establish individual trust accounts for each individual note series.

KPMG says it could take years for investors get their money back from Portus, but that a bankruptcy under the court would offer the speediest route, making it easier to liquidate investments, such as the Société Générale notes, and distribute all recovered assets to shareholders.

"The objective of distributing maximum value to the investors can be achieved most effectively and practically through a bankruptcy," the report said.

Portus was founded three years ago by Boaz Manor and Michael Mendelson. In July the RCMP launched a criminal investigation into Portus; KPMG had originally made a criminal complaint in April. Toronto-based Portus was forced into receivership last March by the Ontario Securities Commission. In June, KPMG won an Ontario court order compelling founder Boaz Manor to account for all the money originating from the now-insolvent hedge fund Portus in a number of international accounts, but now says that attempts to unravel the tangle of Portus transactions has been frustrated by lack of access to Mr. Manor. He left for Israel in February and has said through a lawyer he is too ill to co-operate.