Canadian police charge Portus founders with fraud

TORONTO, Sept 26 (Reuters) - Canadian police charged the two co-founders of now-defunct Portus Alternative Asset Management Inc with 12 counts of fraud, money laundering, and possession of property obtained by crime on Wednesday, the result of a lengthy international investigation.

A bail hearing at Ontario Superior Court for one of the accused Canadians, Michael Mendelson, 41, was delayed on Wednesday to Oct. 10.

There is an arrest warrant out for his former partner, Boaz Manor, 33, who had been living in Israel and faces four additional charges, including obstructing justice.

“We’re not giving information on where (Manor) is,” said Michele Paradis, spokeswoman for the Royal Canadian Mounted Police.

Portus, which collapsed in 2005 after more than two years in business, managed about C$750 million in Canadian investments and US$52.8 million in foreign investment.

Police allege the funds from Canadian investors “were fraudulently used to operate the business in contrast to its disclosure and without investors’ knowledge”.

The hedge fund was shut down after Ontario regulators inquired about transactions and found funds were not put into Canadian securities as had been promised.

Police allege a portion of the funds was used to pay management fees, performance fees, and salaries. They further alleges that Manor defrauded Portus’s foreign investors by not investing the U.S. currency funds deposited with Portus Group of Companies.

The 27-month investigation involved authorities in 12 countries, police said.

$1=$1 Canadian