Quebec provincial police allege Ronald Weinberg, Hasanian Panju, Lino Pasquale Matteo and John Xanthoudakis were involved in a financial fraud at the Cinar. (CBC, Quebec provincial police)A Montreal judge has granted bail for two people in connection with an alleged $120 million fraud at the defunct children's TV production company, Cinar.

Cinar's former chief financial officer, Hasanain Panju, was released on $50,000 bail on Thursday along with Lino Pasquale Matteo, an executive with the investment-firm Mount Real.

Panju's bail conditions forbid him from holding a position in a public company or from investing in, holding or trading stock.

Matteo, who is seeking a legal-aid lawyer, has also been released on similar conditions.

He agreed to remortgage his home to cover the bail cost.

Panju and Matteo will be back in court May 4.

Arrest warrant issued for Cinar founder

Quebec provincial police arrested Panju, 58, and Matteo, 44, on Wednesday evening following a lengthy police investigation.

Police are still looking for Cinar founder Ronald Weinberg, 59, who is believed to be in Florida where his son owns a house.

An arrest warrant has also been issued for John Xanthoudakis, 52, president of Norshield Financial Group, a Montreal-based hedge fund operator.

Authorities allege the four men orchestrated an elaborate, large-scale fraud.

Weinberg and Panju are alleged to have invested funds, without the approval of the production house's board of directors, in an attempt to profit personally.

Police also allege Xanthoudakis then helped invest the money in the Bahamas, while Matteo helped him camouflage the investments.

The four men are facing a total of 36 charges among them, including fraud, forgery, using fake documents and publishing a false prospectus.

Police probed computer files, documents

Cinar co-founder Ronald Weinberg arrives at the courthouse in Montreal in 2006. (Canadian Press/Paul Chiasson)The fraud allegedly occurred between August 1998 and March 2000.

Sûreté du Québec said said the lengthy investigation included meeting 50 witnesses, including ex-Cinar employees, witnesses in the Bahamas, and Ernst and Young employees in Canada.

Investigators analyzed about 50 boxes worth of documents and nearly 10,000 computer files.

Cinar is best known for its hit children's programs Arthur and Caillou.

The company became mired in scandals in the late 1990s and was sold in 2004 for $144 million.

Both Mount Real and Norshield have been the subject of other legal proceedings for allegedly fleecing investors of millions of dollars.

With files from The Canadian Press