In a case that's becoming all-too-familiar in the hedge fund industry, the Ontario Securities Commission is charging the former president of Portus Alternative Management with fraud and destroying documents, but it appears he has fled the country.

The charges were field late last week in the Ontario Superior Court of Justice against Boaz Manor, as well as three of his associates. Portus has been shut down since earlier this year, when OCS officials discovered that Manor had ordered the destruction of documents, lied to regulators, and had been trading in mutual funds without a license and distributing mutual funds without a prospectus.

The case, which would be Canada's largest hedge fund scandal to date, is eerily familiar to the recent downfall of the U.S. hedge fund Bayou Management Group. In that case, executives at the Stamford, Conn.-based firm lied to investors about assets under management. When authorities finally came knocking, its founder, Samuel Israel III, was feared to have fled the country. Israel and his chief financial officer, Daniel Marino, have since turned themselves in and pleaded guilty to fraud.

But Manor left Canada for the Middle East earlier this month. Regulators say they're prepared to go ahead with a trial, whether or not he returns.

"If we are able to conduct a prosecution in his absence and, at the end of it a jail sentence were imposed, that sentence would come into effect any time he came into the country, whether voluntary or involuntary," said Michael Watson, the OSC's director of enforcement, in a report from the Toronto Star.

Manor, whose New Brunswick-registered firm had collected more than $800 million in assets from more than 25,000 clients both in Canada and abroad, could face upwards of five years in prison and up to $5 million in fines. Manor, a self-described mathematician with a passion for alternative investments, would face extradition only if the Royal Canadian Mounted Police charged him. Former Portus Asset Management President Michael Mendelson and compliance officers Michael Labanowich and John Ogg were also named in the allegations.

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