Son of Daniel (Dan) Manor who is in Canadian Jail for largest hedge fund fraud in Canadian history...
Son Boaz ( AKA Jay ) Manor
http://www.thestar.com/business/markets/article/997166--failed-hedge-fund-fraudster-gets-four-years-in-jail
Failed hedge fund fraudster gets four years in jail
Date:
Thursday, May 26, 2011Author:
Boaz Manor, chief suspect behind Portus hedge fund collapse, leaves court at Old City Hall in Toronto on
Nov. 13, 2007. Manor was sentenced Wednesday to four years in jail.
Boaz Manor, convicted of defrauding thousands of investors in a Toronto-based hedge fund once
worth $800 million, has been sentenced to four years in jail.
The sentence was handed down Wednesday morning by Justice Ian Nordheimer of the Ontario
Superior Court of Justice.
It nearly puts an end to a six-year-old saga involving what was once Canada’s biggest hedge fund,
the country’s largest life insurance company, a tangled web of offshore bank accounts, an extended
stay in Israel, and nearly $9 million in diamonds that have never been recovered.
Manor co-founded Portus Alternative Asset Management Inc. in 2003. Regulators stepped in to
prevent the company from opening new accounts in February 2005 because of concerns about
investment suitability and record keeping.
By then, the company had about 26,000 investors.
The fund was forced into receivership and Manor left for Israel soon after. He returned about two-and
-a-half years later after criminal charges were laid and surrendered to authorities.
There was no trial. Manor, 37, pleaded guilty in November to one count of money laundering funds
obtained through breach of trust and one court of disobeying a court order.
The four-year sentence was reached through an agreement between Manor’s defence lawyer, Brian
Greenspan, and Crown prosecutor John Pearson, and approved by the judge.
Madhavi Acharya and Tom Yew, Toronto StarManor, 37, dressed in a tan dress shirt and black pants looked relaxed through the proceedings. No
family members were present in the courtroom.
Given the opportunity to speak, he declined to do so. He was handcuffed and led away by the court
officer at the conclusion of the hearing.
“Once his sentence is completed one can only hope Mr. Manor will employ his evident talents in a
manner that conforms to the law,” Justice Nordheimer said.
Manor is bankrupt and divorced, but has support from his family and an amicable relationship with
his ex-wife, the court heard. The proceeding was initially slated for last week, but pushed back so his
7-year-old daughter could be prepared for the outcome, Greenspan told the court.
“This was no scam or fraud in the traditional sense where vast sums are siphoned off,” Greenspan
said, adding that Manor did not defraud investors to live a lavish lifestyle.
The word Portus means safe harbour, Pearson told the court. “But for people who invested in Portus,
it was anything but safe harbour.”
Manor and co-founder Michael Mendelson, promised investors their principal would be guaranteed,
and they would earn interest as high as 12 per cent.
The firm's growth took off, thanks in part to an arrangement with life insurance giant Manulife
Financial Corp., which referred clients for a fee.
According to the court documents, the fund took in about $750 million (Canadian) and another $50
million (U.S.). About $106 million was misappropriated, used to pay commissions, referral fees, rent
utilities, salaries and payroll.
It took investigators with KPMG LLP nearly two years to track the trail of accounts in the Cayman
Islands, Turks & Caicos, Bermuda, Switzerland, and the U.S.
The most bizarre twist: $8.8 million was transferred to two companies in Hong Kong and used to buy
diamonds, which were picked up by Manor’s sister-in-law in June 2005, the court documents say.
Manor does not know where the diamonds are, Pearson told the court. “If he does find out where
they are, he will bring it to the attention of the receiver.”
The prosecutor said that investors have been paid back 95 cents of each dollar invested. Greenspan
argued the true amount would actually be closer to $1.02, including funds seized from personal
accounts and sales commissions which were turned over to the receiver and distributed to investors.
“Perhaps it was safer than other investments during that period,” Greenspan said, adding “I don’t say
that as justification.”
Greenspan also disputed that Manor, who was born in Israel and came to Canada with his parents at
age 14, “fled” to his country of birth.
“It was always self-evident where he was,” Greenspan said, adding that Manor returned to Canada
voluntarily.
Proceedings before the Ontario Securities Commission are still outstanding.
In 2007, Mendelson. pleaded guilty to one count of fraud and was sentenced to two years in prison
for his part in the collapse of the fund.
http://www.forward.com/articles/3596/
Canadian Financier’s Rapid Climb Ends
TORONTO — Israeli-born financial wunderkind Boaz Manor generated national headlines earlier this year
when he returned to his native country after being served with a court order by Canadian authorities
investigating his failed hedge fund. Now, Manor’s father, Daniel, himself a leading businessman, is defending
his son’s decision to head back to Israel.
Daniel Manor, one of the most successful entrepreneurs in Toronto’s 50,000-member Israeli community, told
the Forward that he has “no idea” whether his son will return to Canada after being accused of attempting to
misappropriate more than $1 million. But, he added, the younger Manor — the co-founder and very public face
of Portus Alternative Asset Management Inc., previously Canada’s fastest growing hedge fund — is
“absolutely” innocent of any wrongdoing.
“I think that he has been crucified by the establishment here, the banks, for being too successful,” the father
said, adding that his son left Canada on the advice of lawyers. “They know how the justice machine — or
injustice machine — is operating in Canada.”
The scandal has triggered a spate of antisemitic comments in online investor discussion forums excoriating
Israel for being a haven for swindlers. In fact, Israel has an extradition treaty with Canada, though it is unclear
whether alleged white-collar offenders would be as easily extraditable as violent offenders.
An Israeli embassy spokesman did not return calls from the Forward.
For the younger Manor, the decision to return to Israel marks what is probably the final chapter of his fairytale
rapid rise up Canada’s financial ladder.
When Manor graduated from University of Toronto in 1996 with a bachelor’s degree in applied science, it
appeared likely that he would join the family business. His father had emigrated from Israel in 1988 after a 30-
year career developing defense systems for the Israeli military. In Canada, he built a flourishing company that
makes cameras used for monitoring traffic.
Following a brief stint with his father’s firm, however, Boaz moved into finance, teaming up with Michael
Mendelson, an entrepreneur originally from Texas. The two were initially involved in a venture capital fund
investing in high-tech firms, but after the tech bubble burst in 2000, they were drawn to hedge funds, which are
similar to mutual funds but are allowed to make riskier investments and are intended for wealthy, sophisticated
investors.
Manor went to New York to learn the business from hedge fund maven James Park, chairman and CEO of
Paradigm Global Advisors. By early 2003, Manor and Mendelson had formed Paradigm Asset Management
(they changed the name to Portus last year, after Park objected to their use of the Paradigm name).
Despite his youth and extremely limited experience in the hedge fund industry, Manor succeeded in
persuading established investment advisers to refer clients to Portus in large numbers. Critics said he
accomplished this feat by offering unusually high referral fees.
Ramy Elitzur, a professor of financial analysis and associate professor of accounting at the University of
Toronto who knows Manor, described him as “young, brash and tenacious.” Manor and Mendelson were good
salespeople and the fund initially prospered, he said. “But one day, if you don’t know what you’re doing and
you’re taking huge risks, you’re going to meet your nemesis and it’s going to sink you,” Manor said. “It wasn’t
done, I think, because of an evil agenda. He just miscalculated big time. He was careless. He’s a bright kid. He
should come back and face the music.”
Manor’s hedge fund had sold $605 million of its products to 26,000 investors over the past three years. But in
March, the Ontario Securities Commission forced Portus into receivership as it investigated the fund for
allegedly selling investments in violation of provincial laws governing hedge funds.
KPMG, the court-appointed receiver of Portus, recently filed a report claiming that the fund’s liabilities exceed
its assets by more than $320 million, and that $2.4 million was fraudulently transferred to a private bank
February 1, when Portus was already insolvent and under investigation. The KPMG report alleged that Manor
“was attempting to misappropriate somewhere between $1.2 million and $1.6 million” of the transferred money.
Manor flew to Israel in March after an Ontario judge issued an order requiring him to co-operate with KPMG.
In his recent interview with the Forward, the senior Manor condemned the Canadian media and securities
regulators for ruining his son’s business. The Ontario Securities Commission “barged in like a bull into a china
shop,” he said. “It’s a very sensitive situation. They created a total brouhaha that caused the whole thing to
collapse. He lost his business out of the insensitivity of the press and the commission.”
KPMG initially received a letter from Boaz Manor’s lsraeli lawyer stating that he would be willing to be
interviewed by the receiver — but only in Israel. Now, however, the lawyer has written the receiver saying that
Manor is too sick to be interviewed. The lawyer denied that Manor had misappropriated any money. The letters
were filed as part of the receiver’s report. KPMG’s legal counsel said that should Manor not return to Canada,
the receiver would retain lawyers in Israel and seek an order from an Israeli court upholding the Ontario court
order.
“If he stays in Israel,” Elitzur, the University of Toronto professor, said, “I hope he doesn’t launch a hedge fund
there.”
