Global Courant 2023-05-17 07:41:58
“Everyone gets paid.”
Those words have been uttered more than once by Greg Martel, Victoria’s mortgage broker, who has been accused of running his business as a Ponzi scheme and who owes more than $226 million to hundreds of people who bought investments that – according to documents – may have did not actually exist.
Martel is the sole director of My Mortgage Auction Corp. (MMAC), which did business as Shop Your Own Mortgage (SYOM). Chief among creditors is an investor identified as 1548199 Alberta Ltd., who claims in a civil suit that it owes a whopping $17.6 million. Two weeks ago, MMAC and Martel were placed in receivership by the court overseen by PricewaterhouseCoopers.
Last week, in a virtual town hall for investors, PwC Vice President Neil Bunker delivered sobering news to the 500 people who tuned in: Not only is Martel’s whereabouts uncertain, investigators have yet to locate the missing millions or prove the investments were real. .
The big mess of a case returns to the BC Supreme Court in Vancouver for a two-day hearing starting Wednesday. Previous court hearings have taken place ex parte, meaning without Martel’s participation or legal representation, although Vancouver attorney Ritchie Clark told the court last week he was in the process of being detained by Martel.
So, who is Greg Martel anyway? And how did he come to owe so much money to so many people?
Friends tell friends…
CBC spoke to five investors, four of whom declined to be named. All said they had heard about Martel from a friend who had made money, which gave them confidence.
Single mom Gayle Morrell said she heard about Martel from a friend whose accredited financial planner recommended investing with him.
Morrell said she worked hard for two years to scrape together $25,000 to invest. At first it all seemed fine. She saw her money grow to over $80,000 and had recently asked to withdraw the original down payment so she could build a detached roof over the RV she lives in with her son.
Now she doubts she will ever see a penny of her money again.
“It was interesting how (investing) changed the way I thought about finances. I thought I was in some rich boys club… I love it, squeaked in, and this is how people with a lot of money make money, ” she said. “And now that it’s all gone, it’s like, crap, back to reality.”
The trustee handling the Greg Martel case lists this heavily mortgaged, five-bedroom home at 2709 Goldstone Heights in Langford, BC, as an asset. (Mike McArthur/CBC)
When bank interest rates were low — one or two percent a year — Martel offered annualized interest rates of between 50 and 100 percent for bridge loan investments.
Essentially, it acted like a private bank, pooling investors’ money and lending it at high interest rates for four, eight, twelve and sixteen week terms to real estate projects that needed short-term bridge financing. At least, that’s what he claimed to do. PwC said Friday it has not yet found any documentation indicating the identity of any of the recipients of Martel’s bridging loans.
Investors told CBC they were encouraged to roll their money into new investments when one was due. They said the Shop Your Own Mortgage online portal made depositing and reinvesting easy, and it was exciting to watch your balance go up in multiples of what you could earn in a TFSA or RRSP.
As interest rates rose, so did the returns promised by Martel — rising to 25 percent for a 10-week fixed term, according to court documents, equivalent to an annual rate of 130 percent.
The largest single investment described in the 1548199 Alberta Ltd. lawsuit is $4.675 million for a 10-week term at 17 percent interest. When the investment fell due on November 16, 2022, it would have to pay nearly $800,000 in interest on top of the principal.
Unlike the numbered Alberta company, the investors CBC spoke to did not have millions tied up in the plan. Like Morrell, they describe investing their nest egg, retirement savings, or a down payment on an apartment. All were distraught at their possible losses.
In a statement emailed to CBC, mortgage broker Greg Martel denies running a Ponzi scheme. (Greg Martel/Facebook)
Financial adviser and CBC contributor Mark Ting said that while private bridge loans may be a legitimate investment, they are unregulated and a poor option for mom-and-pop investors who lack the sophistication to verify the veracity of what is being sold .
“Don’t think your mortgage broker has done the due diligence. They don’t know what’s going on. These are loans that others have passed on because they carry way too much risk,” Ting said.
“(The investment) is good until it isn’t. And when it isn’t, it really comes crashing down, almost like a house of cards, which I think is happening in this case.”
Cracks appear
Investors tell CBC that signs of trouble started appearing about a year ago when SYOM’s payouts fell behind.
Typically, it took about 10 days for a customer to receive a payout after requesting funds into their account. Then it was four weeks, then six weeks, a few months… Then nothing.
When investors complained, Martel was quick to assure everyone would get paid, posting online or speaking directly to individual customers over the phone or text. One investor said Martel’s promises to “fix things” seemed sincere and that he came across as “transparent and kind.”
The explanation he gave for the delays also seemed plausible: so many people wanted to invest with him that the company was overwhelmed.
“What’s happening is we’re bringing in a huge number of people,” he said in an online message to investors in February 2023. At the time, he also explained that it was just as important for SYOM to find new bridge loans. so customers could keep their money with him – and grow.
“In exchange for all the money you’ve made from me over the years, from these private loans, please have a little more patience,” he told investors.
That same month, the first of more than a dozen civil suits were filed against Martel and MMAC. On May 4, he and the company were placed in receivership.
Who is Greg Martel?
According to information found online, Martel founded mortgage brokerage Zilla Mortgages in Victoria more than a decade ago before expanding into subsidiaries including MMAC. A few years ago, he launched a peer-to-peer car sharing company in both the US and Canada – think Airbnb for cars – called carSHAIR.
Shop Your Own Mortgage offices in Toronto and at 645 Tyee St. in Victoria were found vacant, according to a trustee’s report. (Mike McArthur/CBC)
CarSHAIR in Vancouver and Victoria has the same seven luxury cars for rent, all hosted by “Greg M.” According to bankruptcy trustee PwC, a number of motor vehicles were found during the search for assets. So have two heavily mortgaged multi-million dollar homes, one in Langford near Victoria and one in Las Vegas.
In 2021, a paid profile in LA Style Magazine described Martel as a “revolutionary serial entrepreneur” and “skyrocketing business leader” who had been “mentored by the famed Tony Robbins”. The magazine sells coverage that promises “press credibility” and connection to a network of “opinion leaders.”
In the article, Martel says he was born in Quebec, grew up in Toronto, then moved “for hockey” before settling in Victoria. On social media, he lists his home as Newport Beach, California.
Martel and American Garrick Delafuente, the American broker of record for Shop Your Own Mortgage, are co-hosting an online podcast, “Just the Tip”, which promises “the biggest scoops from the worlds of business, finance, real estate and mortgage knowledge”! “
Martel has a network of companies in Canada and the United States that mixed money, according to PwC. An MMAC bank account with a remaining balance of $279 was found to have funneled $58 million over the past six months.
Morrell, for her part, is trying to make peace with the fact that her money is likely to run out as she deals with the anxiety and stress.
“I don’t want to give Greg my health and well-being as well,” she said. “I’m really trying to be kind to myself and be careful and just let this be about a lot of money and not so much more.”
