Disgraced Victoria mortgage broker Greg Martel will not be released from the debts that have been mounting around him.
B.C. Supreme Court has adjourned Martel’s bankruptcy discharge hearing, which means he will remain an “undischarged bankrupt” and his debts of more than $300 million will remain intact.
In making the ruling, the court cited the opposition of the trustee overseeing Martel’s bankruptcy and a scathing report the trustee provided in making the case that Martel not be discharged.
A person is often eligible for an automatic discharge from bankruptcy, and released from certain financial obligations, at the end of nine months from the date of commencement of personal bankruptcy unless there is opposition. Martel’s nine-month period ended on May 31.
The report, prepared by trustee PricewaterhouseCoopers and filed with the Office of the Superintendent of Bankruptcy, noted Martel had been running a massive Ponzi scheme and investors who are out more than $317 million will never see a dime of that money, which Martel never used to make bridge loans as promised.
The report, signed by PwC partner Neil Bunker, said Martel failed to comply with many of the duties required in his own bankruptcy and that of his company, My Mortgage Auction Corp.
My Mortgage Auction was the vehicle through which Martel took investors’ money with the promise it would be used to provide short-term loans for real estate transactions and construction. PwC said no loans were issued.
“Martel orchestrated a massive Ponzi scheme through MMAC and raised over $270 million from investors on false pretences which has resulted in claims from at least 930 investors totalling more than $317 million,” the report said. “The trustee does not expect that the investors will receive any recovery from the bankruptcy estates of Martel or MMAC.”
PwC tracked more than 50,000 transactions through more than 40 accounts at financial institutions.
The report said “investor funds loaned to MMAC for the purpose of funding bridge loans were not used to fund bridge loans but instead were used for other purposes.” The other purposes included paying other investors, funding related companies and funding large operating expenses. “The flow of funds indicates that MMAC operated as a Ponzi scheme,” it said. A Ponzi scheme is a fraud where existing investors are paid with money from new investors.
Martel was solely responsible for the fraud, failed to provide records for his personal finances or those of My Mortgage Auction and lived an extravagant lifestyle, PwC said. “Martel often mixed his personal affairs with those of MMAC and the other corporations which he owned and controlled — all of which were or ultimately became insolvent.”
Martel’s spending between 2018 and 2023 included $3.1 million on travel, $3.1 million on vehicles, $1.1 million on rent, $261,000 on meals, $200,000 on jewelry and $150,000 on recreation and vacations.
The report accuses Martel of committing a number of offences under the Bankruptcy and Insolvency Act, including concealing documents, obtaining credit or property by false representation and concealing property.
PwC said during a year of investigation, it had only found a fraction of the missing money.
Money collected has covered legal fees, but is less than what is owed to PwC for its work. The minutes of a bankruptcy inspectors’ meeting held in December show PwC was owed $1.8 million, of which only $103,000 had been paid.
Martel’s whereabouts are unknown to PwC, but it said it learned he had been exiled from Thailand after Aug. 30 and later travelled to Dubai. Warrants for Martel’s arrest have been issued in Canada and the U.S.
PwC noted that both the B.C. Securities Commission and Victoria police are investigating.
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