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New portus allegations
KPMG alleges co-founder misappropriated funds offshore

Wojtek Dabrowski 

June 18, 2005

Portus Alternative Asset Management Inc. co-founder Boaz Manor has allegedly used offshore entities to misappropriate US$3.1-million of funds placed with the collapsed hedge-fund firm by international investors, Portus's receiver said yesterday in a court report.

 

Bo Manorís 1991-1992 yearbook writeup in The Forrester at Forest Hill Collegiate Institute in Toronto.

KPMG Inc. also said it wants Mr. Manor, who has left Canada for Israel, to account for an additional US$17.6-million of foreign investors' money which the receiver has not been able to secure thus far.

It will ask a judge later this month to demand the return of the US$3.1-million that it accuses Mr. Manor of misappropriating.

Further, in the report filed in Ontario Superior Court, KPMG also claims it has learned from a confidential informant that Mr. Manor allegedly tried to transfer US$36-million under his control in an offshore jurisdiction, possibly in the Caribbean.

The informant told KPMG Mr. Manor allegedly sought the help of a "foreign fiduciary," possibly in Europe, but has been stymied in his effort "due to his connection with the Portus Group and its financial and legal difficulties."

Toronto-based Portus, which marketed so-called "funds of hedge funds" to investors, had 26,000 clients and about $730-million in assets under management when regulators moved against it in early February. The firm was shuttered by the Ontario Securities Commission and investor funds remain effectively frozen. Mr. Manor has left the country for Israel and his lawyers say he is too ill to be interviewed by KPMG.

The various Portus investigations, including a review by the RCMP, have begun to unravel a complex web of domestic and international entities. Regulators and KPMG are sifting through a multitude of transactions to determine where investor money is located.

KPMG also disclosed it has obtained court-ordered control over a number of offshore Portus-related companies in Cayman Islands, Jersey, the British Virgin Islands, and Turks and Caicos as part of its efforts. It says it appears Portus received a total of US$52.8-million from international investors, US$35-million of which has been secured thus far.

"Although some of the investment funds were from time to time used to purchase short-term deposit certificates, no other investments described to the international investors by the Portus Group were ever purchased," KPMG writes in its report.

The receiver had earlier accused Mr. Manor of trying to misappropriate as much as $2-million from a trust purportedly set up to cover Portus officers' legal expenses.

Mr. Manor's legal counsel in Israel, the firm of Yehuda Weinstein, have proclaimed his innocence and called KPMG's claims "misinformed." KPMG says that US$700,000 of Portus investors' money has been transferred to the law firm. It has asked Yehuda Weinstein not to disburse the money.

Aside from that amount, KPMG says Mr. Manor's alleged misappropriation includes a transfer of about US$2.5-million to an account at Banca di Roma in Milan, Italy.

KPMG alleges most of the money was then withdrawn "on Manor's instructions and for his benefit," while US$384,000 was sent to an account at Mercantile Bank in St. Petersburg, Fla. Mercantile is a community bank serving businesses in the Tampa Bay area.
 

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