Portus Co-Founder Gets Four Years In Fraud Case

May 26 2011 | 10:51am ET

The mastermind behind the Portus Alternative Asset Management hedge fund fraud will spend the next four years in jail.

Boaz Manor, who pleaded guilty in November to money laundering and disobeying a court order, saw his sentencing deal with prosecutors approved by a Toronto judge yesterday. Manor spent more than two years on the lam in Israel before returning to Canada in November 2007, two months after he was charged alongside Portus co-founder Michael Mendelsohn.

Portus, once Canada's largest hedge fund, was shuttered by regulators in March 2005. The firm–and, by extension, Manor and Mendelsohn, who was sentenced to two years in prison—misused some C$110 million in investor funds, prosecutors alleged. But Manor's lawyer said yesterday there was nothing nefarious about the Portus scandal.

"This was no scam or fraud in the traditional sense where vast sums are siphoned off," Brian Greenspan said. Investors have received 95% of their money back, according to prosecutors.

Still missing are nearly C$10 million worth of diamonds, which Manor has apparently lost track of.

"Perhaps it was safer than other investments during the period," Greenspan said. "I don't say that as justification." And the lawyer promised that "if he does find out where they are, he will bring it to the attention of the receiver."

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