Alleged Fraudster Greg Martel Declared Bankrupt Amid Recovery and Contempt Proceedings

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The labyrinthine tale of Greg Martel, the alleged financial fraudster, took a decisive tilt on Thursday. Following a hearing in the B.C. Supreme Court in Victoria, Martel was declared personally bankrupt, a move designed to expedite the recovery of his assets by the receiver in the case, PricewaterhouseCoopers (PwC).

The primary assets PwC seeks to recover include a resplendent mansion in Las Vegas, a house near Victoria in Langford, and an Ontario cabin co-owned with an ex-spouse. Together these properties could garner around $4 million, a modest fraction of the nearly quarter-billion-dollar debt Martel has allegedly accrued.

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In parallel, a court application is envisaged to declare Martel contemptuous, a verdict that could end up with him behind bars, subject to his whereabouts in Canada being ascertained.

Martel, a Victoria-based mortgage broker whose reputation is now tarnished, reportedly owes an eye-watering $226 million to approximately 1,200 investors via his business, Shop Your Own Mortgage (SYOM), also known as My Mortgage Auction Corp, where he remains the sole director.

The central business model of SYOM revolved around pooling investor funds to tender short-term bridge loans to real estate developers. Potential investors were enticed with lofty rates of return, sometimes as galactic as 100% interest annually. However, this bright facade began to crumble when investors started raising complaints about delays in their payouts which eventually ceased completely.

In response to this debacle, Martel and SYOM became the defendants in over a dozen lawsuits which were later consolidated under a receivership order.

To date, PwC has identified no proof that the bridge loans Martel was promoting even existed, fuelling speculation that he was operating a Ponzi scheme—a claim Martel has refuted.

Only $300,000 of the millions in missing funds have so far been retrieved. Progress in tracking the remaining funds has been arduously slow, primarily due to Martel’s alleged non-compliance with court orders insisting he release financial records and cooperate with the receiver.

Furthermore, Martel’s current location remains a mystery, fueling rumors of his possible presence in Thailand. While no criminal charges have been pressed yet, the B.C. Securities Commission has initiated a criminal investigation.

Additionally, a preliminary probe conducted by the B.C. Financial Securities Authority led to Martel’s suspension and revealed he had “misappropriated millions of dollars in bridge loan investment funds for personal benefit.”

As per Neil Bunker, Senior Vice President at PwC, Martel’s financial records, as and when unearthed, were found to be improperly prepared and riddled with inaccuracies. Bunker also disclosed to creditors that Martel had incurred a staggering loss of about $20 million trading stocks in just one of his TD Ameritrade accounts.

At present, PwC is creating a “funds flow analysis” using bank statements to reconstruct a trail indicating the possible destinations of the investor funds.

In an exacerbation of this scandal, three local MPs have reached out to the Minister of National Revenue, seeking assistance in dealing with fraudulent T5 tax slips issued by SYOM. These slips indicate gains investors have not realized but are nonetheless expected or have already paid substantial taxes on.

Coupled with financial ruin, many of these investors, predominantly seniors, have lost primary residences and benefits in the fallout.

Martel’s legal team is now seeking a constitutional exemption that would absolve him from providing documents and information to the receiver, arguing it could be used against him in any potential US criminal proceedings.

In an earlier development, a sealing order request to keep Martel’s spare disclosures private was denied.

A subsequent hearing on the matter has been scheduled for Sep. 11 and 12 at the B.C. Supreme Court in Vancouver.