From Safe Distance, Manor Blames Lawyer For Portus Ills

May 17 2007 | 4:00pm ET

Left with little more than a “fantastic story” in his defense, alleged hedge fund fraudster Boaz Manor dusted off a time-tested refuge of the accused: Blame your lawyer.

Manor, co-founder of the collapsed Canadian hedge fund Portus Alternative Asset Management, has not been the most cooperative of suspects. After the C$800 million (US$728 million) hedge fund collapsed, but before the Ontario Securities Commission seized its assets, he fled to Israel, where he need not fear extradition. He tried to move some US$35 million from Caribbean bank accounts and bought almost US$9 million worth of diamonds, in Hong Kong. When he did finally get around to meeting with KPMG, the court-appointed receiver for Portus, he pointed the finger at lawyer Anthony Malcolm.

According to Manor, Malcolm set up companies in the Caribbean and directed Manor to register Portus’ fund in his own name. According to KPMG, Manor’s story was “not credible.”

“His explanations for many events were confusing, convoluted, imprecise and unsupported,” KPMG writes in a report. Manor, it seems, would not disagree.

“I know that a lot of the things I’m saying are fantastic in nature,” the report quotes Manor as saying. “Going to Italy, going to Zurich, there’s diamonds, there’s hundreds of millions of dollars, if you lump it all together, it’s sort of a fantastic story.”

For his part, Malcolm—who KPMG deemed credible—denied all of Manor’s claims against him.

KPMG presented its report to a judge in Canada today, seeking approval to ask courts all around the world—in the Caribbean, Israel, Italy and Switzerland—for help in recovering what might be left of the US$18 million that remains missing. Manor and his co-founder, Michael Mendelson, have been charged with failing to act in good faith and face fines of up to C$5 million and five years in jail.

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