He said his name was Jean-Pierre Regli, and he was an investment adviser based in Lugano, Switzerland. His trade involved managing the assets of wealthy people and navigating the murky waters of private and offshore banking. Regli told KPMG he had been working for Manor since the previous year, setting up a bank account for him at the Banca di Roma in Italy and helping him move funds around. For instance, in the summer of 2004, $2.5-million (U.S.) of Portus investors’ money was deposited into that Italian account. “[Manor] said the funds belonged to him,” says Regli. “He claimed it was commission he took from investors up front.” (None of this money was ever recovered.)
But what Regli said next really made Finnigan sit up and take notice. He said Manor had contacted him since he had left Canada, asking whether Regli could help him transfer between $34-million and $40-million (U.S.) from offshore bank accounts to Europe, apparently with the intention of investing the money. This, too, was Portus cash that KPMG and Finnigan had never heard about.
Regli contacted KPMG because he’d heard about the OSC investigation. Initially, Manor told Regli he wanted to use the money to buy a house in Italy and invest the rest in a Swiss bank. “And then after a few weeks, there was a new story popping up,” recalls Regli. “He wanted all of the money in cash and no real estate and no Swiss bank account.”
Thanks to Regli’s tip, KPMG and Finnigan learned that in 2003, of the $800-million Manor and Mendelson had raised, about $53-million (U.S.) of it–derived from 900 investors–was supposed to be invested offshore. To that end, Manor had hired veteran Montreal lawyer Anthony Malcolm to set up a series of offshore trusts and companies. Malcolm later admitted he spent more than $1-million of Portus funds to make secret and unrecorded payments to bankers and board nominees in the Cayman Islands and Turks and Caicos to get the Portus companies and accounts off the ground. (Despite famously loose regulation in those jurisdictions, such payments are illegal.) Yet KPMG discovered that none of the $53-million (U.S.) had been invested; the money was languishing in the offshore accounts. Says Finnigan: “It’s pretty clear there was no legitimate purpose to sending money offshore, and someone was trying to hide it and keep it from investors’ reach.”
Today Greenspan says that after Portus was shut down, Manor received legal advice confirming his opinion that the $53-million (U.S.) was not affected by the OSC’s cease-trading order because the cash was offshore and therefore outside the commission’s jurisdiction. “Bo thought the OSC had been precipitous,” explains Greenspan. “I think Bo’s position is that when he goes [abroad], he’s trying to salvage things and make sure that the offshore money is invested.” Whatever his intentions, once KPMG was appointed receiver, no Portus money was to be touched without its permission–no matter where it was.
Having learned about the offshore holdings, KPMG and Finnigan were soon unearthing a crazy quilt of offshore entities that Manor had set up over the previous two years–a total of 130 Portus accounts in 10 different countries.
They also learned that Regli was not the only proxy Manor had used to move money around. There was also Nigel Freeman, a debonair Cambridge-educated Brit who lives in Bermuda and acts as a private banker. KPMG concluded that Manor dictated instructions to Freeman through Anthony Malcolm, the lawyer in Montreal.
In 2004, Freeman had opened an account in his own name at the Credit Suisse bank in Zurich–which, to KPMG, became known as the Freeman Account. He opened a safety deposit box in Zurich as well. Freeman later testified that this account and box were used to transfer money on behalf of Manor. The only other person who had access to the box was John Dallas Campbell, a high school buddy of Manor’s who acted as a “runner”–moving money in and out of the box.
In the end, KPMG and Finnigan succeeded in finding most–about $35-million (U.S.)–of the offshore money before Manor could move it. “We traced it through these various jurisdictions before we ended up at this account in the Turks and Caicos,” recalls Finnigan. But of the original $53-million (U.S.), $17.6-million (U.S.) was still missing. Where had it all gone?
Malcolm, for one, had been paid $2.7-million (U.S.) for his services, it later became clear. Another $2.5-million (U.S.) had ended up in the Italian bank account Regli had helped set up; it also disappeared. (When finally confronted by Finnigan, Manor claimed he gave that money to the mysterious man in Milan whom he could not describe or name.) Then there was the money going in and out of the Freeman Account and safety deposit box–about $1-million vanished this way.