Bankruptcy proceedings for disgraced Victoria mortgage broker Greg Martel found he was operating a “massive” Ponzi scheme that helped fund a lavish lifestyle.
Documents from receiver and trustee PricewaterhouseCoopers (PwC) say an analysis of money from investors that flowed into and out of Martel’s company My Mortgage Auction Corp. (MMAC) — also known as Shop Your Own Mortgage — indicated none of it was used to fund real estate bridge loans, as was advertised.
PwC found that the bridge loans Martel was selling never existed. Instead, money given to Martel was used to pay off earlier investors, channeled into his other companies, or used to cover significant operating expenses in a five-year period from 2018 to 2023.
PwC also says Martel contributed to his bankruptcy in part through “unjustifiable extravagance in living,” including:
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$3.1 million in travel, including private plane charters and accommodations.
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$3.1 million for vehicles that were bought or leased.
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$1.1 million on rent for multiple homes.
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$261,000 on restaurant meals and events.
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$200,000 on watches and jewelry.
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$150,000 on recreation, including massage and vacation resorts.
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$59,000 on fitness and sports, including sporting goods and green fees.
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$50,000 on wine and vineyard events.
A Ponzi scheme is a form of financial fraud where early investors are paid out with funds put in by those who buy in later.
Martel attracted investors by promising sky-high rates of return, sometimes as high as 100 per cent on an annualized basis.
PwC found Martel spent lavishly on private planes, rental homes, cars, jewelry, watches and wine. (Facebook/Greg Martel)
MMAC collapsed last year amid a flurry of lawsuits by investors claiming they were owed money.
The claims were consolidated by the court under a receivership order in May 2023 and PwC was appointed to recover money and assets to pay back jilted investors.
930 creditors, $317M in claims
To date, at least 930 creditors have filed claims against Martel amounting to $317 million. In total, Martel brought in $270 million from his investors, according to PwC.
CBC News spoke to an early MMAC investor who said the results of PwC’s analysis came as no surprise.
Bruce Smid of Edmonton said he invested twice with Martel in 2018, but became suspicious and took his money out.
“I was an early investor and when it started to look a little [iffy] I tried to pull it out,” he said. “It took so long to just get one [investment out] and then even longer to get the second.”
Smid said Martel kept promising higher and higher rates of return.
“I was thinking, ‘Man… this is too good to be true. I gotta get out before it gets bad,” said Smid.
Martel has never co-operated with the receiver or courts, and was found in contempt last year. Warrants for his arrest have been issued in Canada and the U.S.
The report says he was known to be in Thailand and Dubai, but his current whereabouts are uncertain.
PwC says it does not expect investors will receive any recovery from the bankruptcy estates.
It also said the B.C. Securities Commission and Victoria police are investigating.
CBC News has tried to contact Martel a number of times over the last year. In a statement emailed to CBC News last May, he denied he was running a Ponzi scheme.
