Portus founder ordered to pay $320K

Mendelson also slapped with ban from trading

The province’s stock market watchdog has permanently banned Michael Mendelson from trading stocks and becoming an officer or director of a public company for his role in the collapse of hedge fund Portus Alternative Asset Management. The Ontario Securities Commission also reprimanded Mendelson and ordered him to pay back $320,000, money that he insists he doesn’t have.

“I’m just glad it’s over,” Mendelson said Friday, after the OSC released its decision on sanctions.

According to the order, handed down by commissioner Edward Kerwin, Mendelson is permanently prohibited from holding any securities, with the exception of mutual funds in his Registered Retirement Savings Plan.

Mendelson and his partner Boaz Manor started Portus in 2003. With referrals from huge companies such as Manulife Financial Corp., the company attracted 26,000 clients and $800 million in assets.

The fund collapsed in 2005 after regulators stepped in and froze its assets amid concerns about recordkeeping and investment suitability.

Portus went into receivership after Manor fled to Israel and used investor funds to buy $8.8 million worth of diamonds, which have never been recovered.

Manor pleaded guilty to criminal charges and is currently serving a four-year jail sentence.

Mendelson pleaded guilty to one count of fraud and was sentenced to two years in jail. He served six months. He started his own company, called Mikael Meir Inc., and is now a self-employed consultant who specializes in business ethics.

In January and March of 2005, just before and after the OSC began investigating Portus, Mendelson “authorized payments to himself” of $320,000, according to documents filed in the proceedings.

He told the commission that he is a changed man.