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Portus Founder Faces Gaol In Israel

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

21 December 2005


The net is tightening around Boaz Manor, founder of defunct Canadian hedge fund Portus Asset Management, who fled to Israel last February and is being pursued by liquidators KPMG, who have now asked an Israeli judge to imprison Manor if he won't co-operate with them.

According to Israeli press reports, a Tel Aviv judge last week gave Manor three days to deliver more than 100 diamonds worth $11.6m, allegedly bought with Portus funds, to KPMG, or face arrest.

At another hearing last week, the judge rejected Manor's appeal against a magistrate's court ruling that ordered him to answer questions presented by KPMG. Boaz Manor's lawyer had claimed that he has severe psychiatric problems, and therefore cannot meet KPMG.

KPMG had obtained ex parte orders against Manor in November from Judge Judge H. Weinboum-Waletzky of the Tel Aviv Court of Peace and Judge Magen Altuvia of the District Court of Tel Aviv. KPMG also says that it had obtained a lien on up to $20.7 million over Manor’s property in Israel, representing $3.1 million that Manor allegedly transferred to his lawyer and $17.6 million missing from Portus's funds.

KPMG told an Ontario court in November that it will again ask a Hong Kong judge to order Manor's sister-in-law to answer questions about the missing diamonds. Yu Jieying picked up $8.8 million worth of diamonds, including a 22-carat gem, which Manor arranged to be purchased, said KPMG lawyer John Finnigan. She had ignored a previous order to submit to questioning on October 13th. "We're seeking remedies against her," Finnigan told Ontario Superior Court judge Colin Campbell. Ms Yu's sister reportedly confirmed to KPMG that she picked up several packages from a dealer in June and July, but that she did not know what was inside and passed them on to a further, unnamed individual.

Manor also faces charges brought in Canada by the Ontario Securities Commission, which his Ontario lawyer says he will fight. Lawyer Brian Greenspan said: "He intends, obviously, to defend and respond to the charges and it's always been his intention to appear as required in answer to any charges that are brought against him."

Portus was put into receivership in March and in June KPMG won an Ontario court order compelling Boaz Manor to account for all the money originating from the now-insolvent hedge fund. Manor could face up to 15 years in prison if convicted of the three counts of violating Ontario's securities act brought by the Securities Commission, and a fine of $1 million fine per count. However, Michael Watson, head of the OSC's enforcement branch, admitted that while it is possible to try Manor in abstentia, he can't be forced to return to face the charges in Ontario. "Most provincial statute offences would not be subject to extradition and, in fact, most provincial statute offences - even if the person were here - wouldn't be subject to arrest," Watson said.

The RCMP is also investigating the affair and may stand a better chance of attacking Manor under Federal laws - but they were very slow to begin investigations and there has been no news about their progress.

KPMG said in court reports that managers of defunct Canadian hedge fund Portus skimmed up to 13% of assets; KPMG wants to make Portus bankrupt in order to speed up distributions to the 26,000 cheated investors. The report says that to date, about $662.15 million (Canadian) and about $37.2 million (US) 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 $529m, and mature between 2008 and 2011.

Although most of the Portus assets have been identified and can be recovered, it is thought that it will take years for investors to get their money back.


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