The RCMP charged the co-founders of Portus Alternative Asset Management with fraud related to the hedge fund's 2005 collapse.

The police said Wednesday that Boaz Manor and Michael Mendelson have been charged with 12 counts of fraud over $5,000, money laundering and possession of property obtained by crime.

Manor, 33, has also been charged with a sixth fraud charge, two additional counts of money laundering and one count of obstructing justice.

Mendelson, 41, was due to make a first appearance in a Toronto court on Wednesday, but it was rescheduled to Oct. 10. Manor is currently living in Israel, and the RCMP said an arrest warrant has been issued for him.

The charges stem from a 27-month investigation by the RCMP commercial crimes unit and and the OPP's anti-rackets sections.

Police allege that during its operations from January 2003 until March 2005, the Portus Group of Companies, which included the hedge fund, misused some of the $750 million raised from 26,000 Canadian investors. They charge that Portus used some of the money to pay management fees, performance fees, referral fees, trailer fees and salaries.

The police also alleged that Manor defrauded foreign investors by not investing US-dollar denominated funds deposited with Portus. The company raised about $52.8 million US from 700 investors who mainly came from Canada, Hong Kong, Taiwan and Bermuda.

The OSC alleged in the fall of 2005 that Portus had improperly diverted $95.4 million. It has laid several charges against Manor under the Ontario Securities Act.

After being pushed into receivership in 2005, Portus Alternative Asset Management went into bankruptcy in 2006.