Court Gives KPMG More Powers In Portus Case

by Glen Shapiro, LawAndTax-News.com, New York

27 July 2005

KPMG, court-appointed receiver of bankrupt Canadian investment fund Portus, has obtained a "letter of request" signed by an Ontario Superior Court judge formally asking for the assistance of the courts in Israel in obtaining co-operation from Boaz Manor, a co-founder of the fund, who skipped Canada for Israel immediately after Portus imploded in February.

Using the letter, KPMG will be able to have court orders issued in Canada against Mr. Manor recognized in Israel. KPMG is also reported to have begun investigations in Switzerland and is following up transfers to an account at Banca di Roma in Milan. Previously, KPMG has identified Portus cash only in offshore jurisdictions.

Last week the RCMP finally launched a criminal investigation into Portus; KPMG originally made a criminal complaint in April. "Yes, we are now going forward with a criminal investigation," said RCMP spokesperson Corporal Michele Paradis. "Our Commercial Crime Section will be heading it out of Toronto. They will put together an investigative team with the special skill sets needed to fully investigate this file. If we need to go abroad to investigate this - most certainly," Cpl. Paradis said.

Toronto-based Portus was forced into receivership last March by the Ontario Securities Commission. KPMG has been trying to unravel the hedge fund's investment structure and recover about $800-million invested by some 26,000 clients. Last month, 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.

“We have caught him with his hand in the cookie jar,” John Finnigan, a lawyer representing receiver, KPMG, said during a brief hearing in the Ontario Superior Court. “The issue now is whether he is up to his wrist, elbow or shoulder.”

“We've got significant amounts of evidence pointing that (Manor) is directing the flow,” said Robert Rusko of KPMG. $35m has been frozen in the Turks & Caicos, along with money in other bank accounts in the Cayman Islands and other offshore jurisdictions.

KPMG alleges that Boaz Manor personally handled the investment of Portus assets and transferred all of it offshore through a series of bank accounts and trusts located in the Caribbean and Europe. KPMG alleges that Mr. Manor misappropriated $3.1m of the money and used part of it to pay for a lawyer in Israel.

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