Global Courant 2023-05-13 04:45:02
The Victoria mortgage broker at the center of a growing financial scandal says he’s not running a Ponzi scheme, though gloomy investors heard details on Friday that their missing money is likely gone for good.
In an emailed statement to CBC, Greg Martel said his company My Mortgage Auction Corp. (MMAC) “…has the ability to enable all investors to recoup their investments.”
“As you know, My Mortgage was placed under guardianship on May 4,” he said. “That’s a pity, but My Mortgage is not insolvent and not, as claimed, a Ponzi scheme.”
Martel is the sole director of MMAC, which sold high-yield bridging loans as investments. Court documents, for example, showed a deal that promised a 16 percent return on an eight-week $50,000 investment, with an $8,000 return in interest.
The moratorium was granted at the request of an Alberta numbered company that claims MMAC and Martel owe it more than $17.6 million dollars.
How many investors are involved in the scandal is unclear, but on Friday more than 500 people attended a virtual town hall for investors organized by curator PricewaterhouseCoopers (PwC). As a court-appointed receiver, PwC is tasked with finding MMAC’s assets, liquidating them and distributing the money resulting from the lawsuit.
In a particularly troubling detail, PwC partner Neil Bunker revealed that to date, researchers have found no concrete information supporting the existence of $186 million in MMAC’s loans receivable listed as assets in its September 2022 financial statements.
Missing data
“These are the loans that investors thought they were investing in,” Bunker said. ‘At this stage, the trustee has not yet found any data that supports the balance of the loans to be received. It would be ideal if Mr. Martel gave us that information, but so far he has chosen not to.’
According to clients, Greg Martel, the sole director of My Mortgage Auction Corp., went online a number of times to try to appease investors who owed money. (VIMEO)
Bunker was asked by investor Kalia Leslie if the investments were real or just a Ponzi scheme.
“If there is no data, it certainly points to the concept that this was a Ponzi scheme,” he said.
A Ponzi scheme is a form of fraud that lures investors into a non-existent company that pays early investors out of the money brought in by investors who buy in later. American Bernie Madoff was convicted of masterminding a $64.8 billion Ponzi scheme, the largest in history. He died in a US prison two years ago.
Bunker said former MMAC employees, including Julie Lyons, CEO of Shop Your Own Mortgage, have worked with the trustee. Lyons was singled out in an affidavit from an investor from Nanaimo, BC, who claimed she continued to sell him investments totaling $318,000 in March of this year, even though MMAC was already in default on customer payments.
$279.98 remaining in the company’s bank account
According to Bunker, the assets located so far include two heavily mortgaged properties purchased in 2022: a 4,170-square-foot, five-bedroom home in Langford, BC — about 9.1 miles west of Victoria — and a 9,220-square-foot , six-bedroom house in Las Vegas, along with a number of motor vehicles and cash of only $279.98 in an MMAC bank account, through which $58 million dollars flowed between November 4, 2022 and May 3, 2023.
“Right now we haven’t found much,” Bunker told investors.
Martel’s exact whereabouts are unknown, though he lists his residence as Newport Beach, California on social media. Process servers couldn’t find him in Victoria and a subpoena was mailed to him. CBC made a number of interview requests via text and emails to Martel.
Until now, legal proceedings against him have taken place ex parte, that is, without his participation or representation. The next hearing date is May 17.
A report prepared by PwC noted that Martel transferred “significant” MMAC funds to other companies he owned or controlled.
On Tuesday, BC Supreme Court Justice Shelley Fitzpatrick ordered the assets of Martel, MMAC, Shop Your Own Corp. in California and Martel Investments Ltd.
However, Martel also owns a number of other companies, including a car-sharing company in both Canada and the United States, which Bunker admits will have a hard time following the money.
In his emailed statement, Martel attributed the problems getting customers their money to exponential growth in 2022 leading to staffing and administrative problems.