Court Orders Portus Founder To Account For Assets

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

28 June 2005

KPMG won an Ontario court order last week compelling 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.”

Documents presented to the court showed that Manor, who co-founded Portus Alternative Asset Management Inc., but left the country precipitately when the court ordered him to co-operate with KPMG in February, tried to move $35m of client money from a Turks & Caicos bank account to Switzerland earlier this month.

“We've got significant amounts of evidence pointing that (Manor) is directing the flow,” said Robert Rusko of KPMG, who is trying to recover $800m of money gone missing in the Portus affair. The $35m has now 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.

Boaz Manor is in Israel, where he agreed to be interviewed by KPMG, but has not arranged a date on the grounds of an unspecified illness. KPMG has asked the RCMP to launch a criminal investigation, but so far the police are still reviewing the case.

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

The Ontario Superior Court also last week agreed with the dropping of a class action against Manulife Securities after that company, which had referred 6,000 clients to Portus, made a "fair and reasonable" offer to reimburse those investors the total of $235m they had put forward.

Manulife clients can choose to exchange their Portus investment for either a principal-protected note referenced to a portfolio of mutual funds managed by Manulife, a Manulife guaranteed investment certificate, or a cash payment equal to all their principal invested with the hedge fund. Class counsel recommended clients to accept the offer, which expires on July 15.

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