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Boaz Manor, formerly of Portus Alternative Asset Management Inc. (Fernando Morales/The Globe and Mail)
Boaz Manor, formerly of Portus Alternative Asset Management Inc. (Fernando Morales/The Globe and Mail)


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In 2007, the RCMP laid 18 charges against Manor. That fall, after his lawyers had negotiated the terms of his return, Manor flew back to Canada, where he was arrested, released on $250,000 bail and ordered to live with his parents.

That same year, Mendelson, who’d co-operated with the RCMP and prosecutors, pleaded guilty to one charge of fraud and accepted a two-year sentence. While he could have fought the charges, he wanted to move on with his life and put the whole Portus episode behind him. He ended up spending six months behind bars. “I went through this spiritual transformation,” says Mendelson. “I’m raising three daughters. I can’t teach them the importance of being truthful if I’m scheming and trying to figure out how to get out of this. I’m clearly implicated in all this stuff that [Manor’s] doing, even though I didn’t have a hand in it. I just wanted to make a new life.”

Manor, in contrast, refused to accept any blame for the Portus fraud or admit he’d stolen any money. After four years of negotiations and delays, Manor finally pleaded guilty to one count of breach of trust and another for disobeying a court order. Today, the Ontario Attorney-General’s office refuses to discuss why the Crown prosecutor, John Pearson, cut this deal. Scott Hutchison, a well-regarded former Crown lawyer and now a Toronto criminal lawyer, observes that “four years is a pretty modest sentence for a breach of trust in the millions.”

What softened the blow was that investors got all of their original money back because most of it had been invested in principal-protected notes. Although an estimated $110-million of investors’ cash had been fraudulently siphoned off, by the time the notes matured a few years later, the interest earned made up for the lost money.

But a full accounting of the mess that Manor and Mendelson made puts many more millions on the loss side of the ledger. KPMG’s work cost $13.7-million–which investors ended up paying, since their assets had been recovered. Lawsuits were launched against Société Générale and Portus’s auditors, PricewaterhouseCoopers; thus the case not only damaged the companies’ reputations but racked up hundreds of thousands in legal bills. And more costs were accrued to deal with the OSC charges that were settled this past August.

Then there are the losses that investors suffered because their cash was never fully invested in the first place. “It’s a misleading story to say there’s no loss,” says one of the KPMG accountants who worked on the case. “If investors got back 100 cents on the dollar, they would’ve been just as well off to put that money under a mattress for three years.” Nor does it take into consideration the hardship borne by investors wondering for up to four years if they would ever see their money again. “Nobody knows how many people had strokes, heart attacks, sleepless nights waiting for years to see if they would get their money back,” says attorney Joel Vale, who was involved in a post-Portus lawsuit.

Mendelson now views his Portus experience with a mixture of regret and defiance, believing he never set out to defraud anyone. Working out of a small office in a holistic-health business complex in east-end Toronto, Mendelson operates a leadership development training agency under a new name. On a recent sunny morning, the 46-year-old sat Buddha-style in his chair, and reluctantly revisited how the two partners ended up in prison–an ordeal that almost cost Mendelson his marriage, and deep-sixed his high-flying career in finance.

“There was major greed there,” Mendelson says. “We wanted to be considered successful in the eyes of other people. It’s what young ambitious guys do on Bay Street.” Since leaving prison, Mendelson has revised his life goals. “My values were misplaced,” he says. “What was important to me back then was money, prestige and success on society’s terms…I have now shifted from being ego-based and self-grasping, to practising living a life of service, using my skills and talents to help others achieve their goals.”

How does he feel about Manor? “So much of my work today is around forgiveness. If you hold on to that kind of stuff, it just eats away at you.…He’s got his karma. Whatever he has done and whatever he’s doing, I feel he will pay for in his life.”

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