Hedge Fund Founder Sentenced for Fraud

Michael Mendelson, a founder of Portus Alternative Asset Management Inc., was sentenced to two years in prison Monday by a Canadian court. The sentence was part of a plea deal under which prosecutors dropped additional counts of fraud and money laundering in exchange for Mendelson’s cooperation.

Several charges are still outstanding against Portus co-founder Boaz Manor. Mendelson’s plea arrangement included an agreed-upon statement of facts which concede guilt and do not bode well for Manor. Mendelson says that he and Manor were “close business partners and the directing minds of the Portus companies.” He further acknowledges that “members of the public were induced to invest on the basis of dishonest representations, which resulted in them being at risk for substantial amounts of money.” He also concedes that more than $100 million was taken from investors and never put into the fund, but instead used to cover operating costs of the Portus companies.

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