/Boaz Manor, business partner indicted on fraud charges in U.S. over blockchain venture

Boaz Manor, business partner indicted on fraud charges in U.S. over blockchain venture


Boaz Manor, a former Canadian hedge fund manager who served jail time following the collapse of Portus Alternative Asset Management Inc. in 2005, was indicted Friday on fresh criminal charges in the United States in connection with an alleged securities fraud scheme at an entirely different venture: a New York-based blockchain technology startup.

As the Financial Post reported a little over a year ago, Manor turned up in 2018 under a new identity — Shaun MacDonald — at a company called Blockchain Terminal and a second entity, CG Blockchain. At the time, people associated with those companies told the Post they had became suspicious of the start-ups’ operations, leadership and prospects.

On Friday, the 46-year-old was indicted by the U.S. Department of Justice along with Edith Pardo, 68, of New Jersey, and accused of “fraudulent misrepresentation” in a scheme that allegedly induced victims to invest $30-million worth of cash and crytocurrency into the blockchain startups.

Manor, who remains at large, and Pardo, who was arrested by special agents of the FBI and was scheduled to appear before a judge in federal court on Friday, are each charged with one count of conspiring to commit wire fraud, three counts of wire fraud and one count of securities fraud.

According to the indictment by the U.S. Attorney’s Office for the District of New Jersey, Manor “secured a significant portion, if not all, of the initial seed money in CG Blockchain from a close family member” and “recruited Pardo to act as a conduit for the money” to conceal its true source.

“The defendants misrepresented to potential CG Blockchain investors that Pardo was an independently wealthy investor who provided millions of dollars in seed money to CG Blockchain,” the indictment says.

Boaz Manor addressing his use of the name Shaun MacDonald in a video posted on YouTube on Wednesday, Dec. 12, 2018.

Boaz Manor addressing his use of the name Shaun MacDonald in a video posted on YouTube on Wednesday, Dec. 12, 2018.

Crypto Crow/YouTube

While raising the money for CG Blockchain, “Manor hid his true identity and criminal past from investors and others by using a variety of aliases, including ‘Shaun MacDonald,’” the DOJ alleges.

He also changed his appearance by darkening his hair and growing a beard, according to the indictment. A handful of people formerly involved with the blockchain venture who spoke to the Financial Post in late 2018 also noted the changes.

The U.S. Securities and Exchange Commission also charged Manor and Pardo in a parallel action.

“Learning about the identity and background of the individual or individuals behind a venture is one of the first things we tell investors to do before trusting anyone with their money,” said Joseph G. Sansone, chief of the SEC’s market abuse unit.

“As alleged in our complaint, Manor’s brazen scheme to conceal his identity and criminal history deprived investors of essential information and allowed the defendants to take over $30 million from investors’ pockets.”

The SEC complaint alleges that the defendants claimed to have 20 hedge funds testing their technology to record transactions on a distributed ledger or blockchain.

Manor’s brazen scheme to conceal his identity and criminal history deprived investors of essential information and allowed the defendants to take over $30 million from investors’ pockets

Joseph G. Sansone, chief of the SEC’s market abuse unit

“In reality, the defendants had only sent a prototype to a dozen funds, and none of the funds used it or paid for it,” the SEC said in a statement Friday describing the allegations against the pair.

Manor became a notorious figure on Bay Street in 2005 when Portus Alternative Asset Management Inc., a $730-million hedge fund, collapsed amid a flurry of allegations about offshore accounts, diamonds and missing investor money.

He initially fled to Israel but returned in 2007 and plead guilty to breach of trust and disobeying a court order. He was sentenced to four years in jail in 2011.

He was out on day parole the following year when he faced Ontario securities regulators, who banned him from that province’s capital markets. He was also ordered to “disgorge” $8.8 million, part of a negotiated settlement related to Manor’s alleged purchase of diamonds with Portus money. At the time, his lawyer said he had neither the diamonds nor the money to pay the regulator’s disgorgement order.

According the DOJ, he founded CG Blockchain following his release from prison, and began creating a product called ComplianceGuard, which was “purportedly designed to provide hedge funds with a blockchain-based auditing tool.”

Financial Post

• Email: b[email protected] | Twitter:

Original Source