Michael Mendelson, co-founder of failed Portus Alternative Asset Management Inc., has pleaded guilty to fraud in a Toronto court. Mendelson was in court for a bail hearing yesterday, but his lawyers used the opportunity to announce a plea bargain.
Mendelson received a two year sentence, in exchange for his agreement to co-operate with law enforcement, which likely means he will testify against his former partner Boaz Manor.
According to Mendelson’s agreed statement of facts, he and Manor acted as “close business partners and the directing minds of the Portus companies.” For his part, Manor has claimed that Mendelson was the brains behind Portus operations and that he was simply engaged in marketing.
Mendelson’s statement claims that he did not know all of the details of Portus’s operations. And he now agreed that investors were lured by “dishonest representations, which resulted in them being at risk for substantial amounts of money.”
He admitted that he knew investor capital was being spent on operating expenses, but claims that he believed this was a short-term arrangement.
“This is a very positive development,” said Robert Rusko, senior vice- president, KPMG Inc., acting in its role as Receiver and Trustee of Portus. “This accelerates the process of getting to the truth. We are very hopeful that Mr. Mendelson’s future testimony will contribute to maximizing recoveries to the Portus estate.”
Manor was released on $250,000 bail on November 14, and is expected to be back in court on November 27.