Portus Founders Charged With Fraud, Obstruction of Justice

Sep 27 2007 | 7:33am ET

More than two years after hedge fund Portus Alternative Asset Management collapsed—and one of its founders fled—Canadian authorities have brought criminal charges against its two founders.

The Royal Canadian Mounted Police have charged Boaz Manor and Michael Mendelson with fraud, money laundering, obstruction of justice and possession of property obtained by a crime in connection with Portus’ failure.

Canadian regulators shuttered the once C$800 million (US$796 million) fund in March 2005. Portus allegedly misused some C$110 million in investors’ funds, while C$18 million remains missing, according to court-appointed receiver KPMG. In addition, Manor has been charged with defrauding investors by not investing U.S. funds it managed.

Manor fled Canada for Israel just before the Ontario Securities Commission seized his fund’s assets two years ago. An arrest warrant has been issued for him.

In addition to the charges brought yesterday, both Manor and Mendelson face charges of failing to act in good faith.

Mendelson’s bail hearing has been postponed to Oct. 10.

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