PricewaterhouseCoopers (PwC), the Trustee in the going bankruptcy case of Gregory Martel, has confirmed in a new report that the BC mortgage broker was indeed taking money from investors to pay previous investors or to use for his own personal gain — also known as a Ponzi scheme.

"PwC has conducted a funds flow analysis on MMAC during its 5 years of operation and has concluded that investor funds loaned to MMAC for the purpose of funding bridge loans (to be made by MMAC to borrowers) were not used to fund bridge loans, but instead were used for other purposes," said PwC in its Section 170 report. "The purposes included repaying other investors, funding related companies, and funding significant operating expenses. The flow of funds indicates that MMAC operated a Ponzi scheme."

In typical personal bankruptcy proceedings, the subject is eligible to be automatically discharged after nine months, unless the Trustee overseeing the proceedings, a creditor, or the Superintendent of Bankruptcy opposes the discharge. If there is opposition, the Truestee must file a Section 170 report before the nine-month period ends, which is May 31, 2024 in Martel's case.

Martel's company was called My Mortgage Auction Corp (MMAC) and was doing business as Shop Your Own Mortgage.

Suspicions that Martel was running a Ponzi scheme first came to light around this time last year, with numerous investors filing lawsuits against Martel and his company. His company was placed under receivership on May 4, before it was transitioned into bankruptcy proceedings. Personal bankruptcy proceedings against Martel, who personally guaranteed the loans, were later initiated by an investor and PwC eventually consolidated the two proceedings.

The full picture of Martel's scheme and the amount of money he took has remained fluid over the past year, as PwC continued to conduct its analysis.

In its Section 170 report, dated May 21, PwC says 930 creditors — most of whom were investors — have filed a grand total of $317M in claims against My Mortgage Auction Corp.

Furthermore, Martel has been uncooperative by making himself minimally available, lying about the location of the money he took from investors, and leaving Canada shortly after the allegations came to light.

"Martel left Canada sometime before the commencement of the receivership of MMAC and the Trustee was aware that he resided in Thailand until August 31, 2023 when he was deported from Thailand and travelled to Dubai, UAE," PwC said in its Section 170 report. "Since the commencement of MMAC's receivership and subsequent bankruptcy, Martel refused to cooperate with the Receiver/Trustee. He did not turn over books and records of MMAC, disclose the nature and extent of MMAC's assets, or answer questions put to him even though court orders were made directing him to do so."

By September, Martel was found guilty of contempt of court and a warrant for his arrest was also issued. Both the BC Securities Commission and the Victoria Police Department are currently investigating Martel and MMAC.

Prior to the allegations coming to light, and likely afterwards as well, Martel lived with "unjustifiable extravagance," said PwC. Between 2018 and 2023, Martel or MMAC spent approximately $3.1M on travel, including private flights; $3.1M on vehicles; $1.1M on rent expenses for multiple homes; $261K on restaurant meals; $200K on watches and jewelry; $150K on recreation; $59K on sporting fees; and $50K on wine and vineyard events.

PwC said in September that it had only been able to recover $292,586. Since then, PwC has overseen the sale of the various homes Martel owned. A home at 3085 Pattee Road in Hawkesbury, Ontario that he co-owned with his ex-wife was sold for $310K. His home at 2709 Goldstone Heights in Victoria was the sold for $2.5M. His home at 28 Quiet Moon Lane in Las Vegas was later sold for $5.1M, although not all of the sales proceeds will be going back to investors who lost their money.

In fact, it's unclear whether investors will be able to recover any of their losses.

"As the controlling mind of MMAC, Martel orchestrated a massive Ponzi scheme through MMAC, and raised over $270M from investors on false pretenses, which has resulted in claims from at least 930 investors totaling more than $317M," said PwC. "The Trustee does not expect that the investors will receive any recovery from the bankruptcy estates of Martel or MMAC."

From Your Site Articles
Finance