The receiver overseeing disgraced Victoria mortgage broker Greg Martel’s bankruptcy expects it may soon be able to say definitively whether Martel’s investment business was actually a Ponzi scheme.
PricewaterhouseCoopers has told investors and creditors who claim Martel owes them in excess of $300 million that it’s now in possession of “a flood of information” through RBC financial transactions.
The receiver is working through the information to provide a report to the courts, and expects to be able to conclude whether Martel’s company My Mortgage Auction was a Ponzi scheme, the trustee wrote in an update to investors.
The funds-flow analysis will track more than 50,000 transactions through 40-plus accounts at various financial institutions, representing more than $295 million invested in short-term-loan investments Martel had been offering through My Mortgage Auction.
The analysis is expected to show where all the money Martel took from investors went, and to determine if the bridge loans he claimed to have arranged ever existed and if there is money sitting in an account somewhere that could offset investors’ losses.
To date, the receiver has found no proof the loans ever existed.
Pricewaterhouse believes there are other investors who have not yet come forward. It anticipates more than 1,300 investors could be tied up in the scheme, which it estimates involves nearly $300 million.
To date, the receiver has recovered only a small fraction of that.
In the update for investors, PwC notes some money has been recovered from the sale of three of Martel’s properties.
The sale of Martel’s Las Vegas property has now been completed for $5.1 million US — enough to pay off an RBC mortgage estimated at more than $3.84 million US.
The remaining proceeds are being held in escrow until the IRS responds to the trustee’s request for a reduction in tax withholdings.
The sale of Martel’s Victoria home for $2.47 million netted just $109,606 for the trustee, while the sale of an Ontario property jointly held by Martel and his former spouse Lesley netted $82,698 for the trustee.
The money collected has covered legal fees, but is less than is now owed to Pricewaterhouse for its work.
PwC again warned investors and creditors that based on what the receiver has been able to recover so far, none of the 860 investors who lodged claims with the receivership for money invested in Martel’s bridge-loan schemes will receive any kind of financial return.
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 current whereabouts are unknown to the receiver, though PwC says 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 both Canada and the U.S.
The B.C. Securities Commission is also investigating.
