John Finnigan’s first question for Boaz Manor was a formality. Pen poised, Finnigan asked for Manor’s address.
Manor stared at the ceiling.
A silence hung in the air of the law firm’s boardroom. Finally, in exasperation, Finnigan demanded: “When you left the house this morning, what was the number on the door?”
The lawyer had good reason to be frustrated. He had fought a long, draining battle in Israel’s courts to force Manor to answer his questions. It was February, 2006, and Finnigan, a commercial litigator with the Toronto law firm Thornton Grout Finnigan LLP, was in Tel Aviv attempting to extract information from the 33-year-old Manor.
Finnigan wanted to know about the whereabouts of tens of millions of dollars that had gone missing after the collapse of Portus Alternative Asset Management Inc., a Bay Street firm that had operated one of Canada’s largest hedge funds. Manor was the investment brains behind Portus, which had been shut down by the Ontario Securities Commission (OSC) in 2005 amid allegations of fraud. Finnigan had been retained by KPMG Inc., the court-appointed receiver, to help it find the money that couldn’t be accounted for.
But the young financier was proving to be an elusive quarry–not only because he had bolted Canada for Israel but also because his answers were unhelpful and elliptical. At one point, Finnigan asked Manor about the identity of a man in Milan, Italy, to whom Manor had given $3-million of Portus funds. Manor didn’t seem to know a thing about him.
“How old was he?” Finnigan asked.
“I’m hazy on that part,” replied Manor.
“You can’t describe him?”
“I’m hazy on it. I don’t want to guess.”
At another point, after Finnigan told Manor that his version of events “sounds made up,” Manor conceded: “I know that a lot of things that I’m saying are fantastic in nature. 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.”
By early 2005, when the OSC discovered irregularities at Portus and shut it down, the hedge fund had raised $800-million from some 26,000 retail investors. Despite the OSC’s imposition of a cease-trading order, Manor went rogue, attempting to move tens of millions of dollars in investor savings to Europe.
The upshot of his efforts was that $17.6-million (U.S.) of investors’ cash was never recovered, of which as much as $12-million (U.S.) could still be under Manor’s control. In total, as much as $130-million was fraudulently diverted by the Portus brain trust, although investors managed to get their original investment back because most of the money had been invested in principal-protected notes held by a French bank, Société Générale SA. By the time they’d matured, the notes’ appreciation covered the losses.
This June, Manor was released from prison after serving a little over a year of a four-year sentence, mostly in a residential-style minimum-security facility. Soon after his release, the OSC slapped Manor with a lifetime ban on trading securities and sitting on the board of a public company, and with an order to disgorge $8.8-million. But the OSC is effectively accepting Manor’s claim that he can’t pay.
Manor may be a free man, but numerous questions hang over his head, especially about where all of that money ended up and whether his punishment fit the crime. “His sentence is a reinforcement that crime pays in Canada. It’s totally inadequate. I’d do 16 months in a provincial or federal penitentiary if I could pocket millions of dollars,” says Bill Majcher, a former RCMP investigator who specialized in financial fraud. “I know the investors were very disappointed with the length of the sentence,” says Finnigan. Were he one of them, he says, “It would give me some heartburn that Manor was walking away with a smirk on his face feeling, ‘They came after me with everything they got and I’m now going to live a very luxurious and happy life from this point on.’ That would gall me.”
Manor is not inclined to chat about the missing cash. But his lawyer is. Brian Greenspan is among Canada’s top defence lawyers, famous for a bravura style of angry exhortation mixed with avuncular charm that he has wielded effectively for clients such as hockey agent Alan Eagleson, Livent co-founder Myron Gottlieb and investment banker Andrew Rankin. Although Manor pleaded guilty to breach of trust and disobeying a court order, that’s as far as he’ll go: He claims he doesn’t have access to the $8.8-million worth of diamonds that he acknowledged in an affidavit he bought with investors’ money. And although his sole partner was convicted of fraud, Greenspan insists Manor is not a master fraudster with a fortune squirrelled away somewhere. “Bo is adamant that he would defend any allegation that he intentionally diverted money to the detriment of investors and defrauded anyone,” says Greenspan. “He’s a strong-willed, stubborn, smart guy who still believes, had he been given the opportunity, he would have vindicated his plan and would’ve provided investors with significant return on their money.”
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