Portus Founder Can't Pay Restitution; Settlement OKed Anyway

Aug 28 2012 | 11:32am ET

The man behind Canada's largest hedge fund fraud accepted some harsh sanctions for his role in the C$800 million scandal.

But Boaz Manor's settlement with Canadian regulators comes with one big caveat.

The Portus Alternative Asset Management co-founder agreed to pay C$8.8 million in restitution to Portus' investors—the value of the sack of diamonds he took with him on the run when the hedge fund collapsed seven years ago. But Manor, who attended yesterday's Ontario Securities Commission hearing on day parole from prison, can't actually pay that sum.

"Mr. Manor is not in possession of the diamonds and does not know their whereabouts at this time," his lawyer, Robin McKechney, said. But Manor, who is serving a four-year sentence for fraud, has initiated legal action in Israel against the financier that he believes has the diamonds.

Manor spent two years on the lam in Israel before returning to Canada to face the charges against him.

In addition to the disgorgement, Manor accepted a lifetime securities-trading ban, as well as a bar from serving as a director or officer of a public company. OSC Vice Chairman James Turner approved the deal yesterday, along with those struck by two other Portus players, Michael Labanowich and John Ogg.

Manor did not speak at the hearing.

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