Friday, August 14, 2009

Diamonds? What Diamonds? KPMG Still In Pursuit Of Portus Diamonds

KPMG says it has asked a Hong Kong judge to force Yu Jieying, sister-in-law of Boaz Manor, founder of bankrupt Canadian hedge fund Portus, to reveal the whereabouts of the $8.8 million worth of diamonds bought with investors' money.

It is known that Manor bought the diamonds from diamond merchant MID in June, 2004, with cash from a Bermuda bank. The gems, including one of 22-carats, were picked up from a shop on four visits by Yu Jieying, and passed on to private banker Yitzhak Toiv. Yu says that she acted on instructions from Manor's wife, Wendy Yu, and had no idea what was in the packages. Manor himself has told Israeli questioners that Toiv still has the diamonds; but Toiv says he returned the gems to Yu.

Meanwhile, back in Canada, Boaz Manor and co-founder Michael Mendelson have been charged by the Ontario Securities Commission with failing to act in good faith with clients. Mendelson was also charged with unregistered trading and issuing securities without filing a prospectus. The maximum penalties are C$5 million and five years in jail.

Earlier, Commission had successfully browbeaten 55 investment and mutual fund dealers into agreeing to repay investors all fees received from the failed hedge fund, totalling $12m. The payments will be made by 31st May.

But KPMG is not yet offering a time-horizon for payouts of the bulk of Portus's assets. The firm says that $662.15 million (Canadian) and about $37.2 million (US) have been found and secured in 130 Portus bank and investment accounts in Canada, the Turks and Caicos and the Cayman Islands, out of more than $800m that was collected by Portus. The majority of Portus assets remain tied up in notes issued by France's Société Générale which were purchased for $529m, and mature between 2008 and 2011.

Investigators Search for Hedge-fund H.K. Diamonds

Date: Tuesday, May 16, 2006
Author: Thomson Dialog, NewsEdge

(Rapaport...South China Morning Post) Financial investigators are trying to locate a stash of 100 diamonds bought in Hong Kong using money linked to a high-profile hedge-fund scandal in Canada. The tangled web leading to the diamonds involves a Hong Kong diamond merchant, a Chinese woman with a Hong Kong identity card who made the purchase, and a Canadian hedge fund co-founder hiding in Israel. When the C$800 million Canadian hedge fund Portus Alternative Asset Management folded in 2005 following allegations that a co-founder misappropriated $95.4 million, it left 26,000 investors out of pocket. The race was on to trace and recover the embezzled cash before it disappeared forever. With all but $17.6 million recovered, investigators appointed to find the missing millions turned their attention to an $8.8 million diamond purchase conducted by Portus co-founder Boaz Manor in Hong Kong. KPMG was charged with winding up the defunct hedge fund. According to the company, Manor bought the diamonds in June via wire transfers from a Bermuda bank to diamond merchant MID (Hong Kong's) ABN Amro account. The diamonds, including a 22-carat gem, were picked up from a shop in Central by Manor's sister-in-law, Yu Jieying --a Hong Kong resident-- on four occasions last summer. A middleman, private banker Yitzhak Toiv, then picked up the diamonds from Yu's office, after which the trail goes dead. All attempts to find the diamonds have failed. The three people involved have all said they do not have the diamonds and do not know where they were. Under a Hong Kong High Court summons, Yu told KPMG that she acted on instructions from Manor's wife, Wendy Yu --her sister-- and had no idea what was in the packages. In testimony to courts in Israel --where Manor fled in 2005-- and in another interview with KPMG, Manor said Toiv still had the gems. Toiv said he returned the gems to Yu, who has denied receiving them.
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