Portus 'the wildest ride ever' TGF On The Money Trail Daryl-Lynn Carlson, Financial Post Published: Wednesday, November 14, 2007 Sifting through the aftermath of the implosion of Portus Alternative Asset Management Inc., the hedge fund was, for the lawyers involved, a case of a lifetime. Working closely with a team of forensic accountants from KPMG Inc., lawyers John Finnigan and James Grout of ThorntonGroutFinnigan in Toronto combined super sleuthing with deft legal maneuvering chasing a money trail that spanned the globe. "Portus has been the wildest ride ever," acknowledges Mr. Finnigan. "We have been all over the world chasing the money." Mr. Finnigan and Mr. Grout were appointed by the Ontario Securities Commission to work with receiver KPMG and help unravel the complex web created by Portus' co-founders to allegedly funnel money taken from 26,000 unwitting Canadian investors into their own, offshore accounts. It was a scheme that led the pair on a wild goose chase, pursuing money and diamonds in the Cayman Islands, Turks and Caicos Islands, Bahamas, Barbados, Bermuda, Jersey, British Virgin Islands, Panama, Costa Rica, Hong Kong, Switzerland, Germany and Israel. When they took on the task, the lawyers had no idea what was in store. "First there was just the issue of trying to understand the structure, how it was supposed to work," says Mr. Finnigan of the business components of Portus that were supposed to have been in place to enable it to purchase investments on behalf of their customers. It was quickly learned that Portus, in fact, had not set up a proper investment structure, and at least $110-million and US$17-million of investors' funds had been diverted. "We had to unravel what actually happened to the money," recalls Mr. Finnigan, whose expertise is in court litigation while Mr. Grout's experience is an insolvency. Mr. Grout says that because the investment structure had never been properly implemented, "the investors had claims against Portus, but Portus had no assets." Leveraging legal creativity, the lawyers convinced Ontario Superior Court Justice Colin Campbell to issue an order declaring that all the assets were indeed the property of Portus so the investors could get some of their money back. Tracing the money, they kept Justice Campbell busy, turning to him each time they found a new shell company. "So we'd go to him in the morning and get an order adding the new name for a receivership order in Ontario," explains Mr. Finnigan. "We'd then get that order recognized in the afternoon in Turks and Caicos, with a judge we had lined up there. Then we'd get an executive order on the banks where we knew the money was." The law firm managed to recover some significant cash. "We scooped $35-million out of a bank account in Turks and Caicos that was just about to be moved to God knows where," says Mr. Finnigan. They also chased about $10-million worth of diamonds around the world, but to no avail; it's suspected those are in Hong Kong. Another $7-million or so is still missing. Boaz Manor, Portus co-founder, was returned from Israel to Toronto yesterday to face fraud charges. © National Post 2007