The saga of alleged financial fraudster Greg Martel took another turn Thursday when Martel was put into personal bankruptcy during a hearing in B.C. Supreme Court in Victoria.

The bankruptcy will help smooth the way for the receiver in the case, PricewaterhouseCoopers, to recover assets owned by Martel in order to pay back some of the money lost by jilted investors.

The main targets are a mansion in Las Vegas, a house in Langford near Victoria, and an Ontario cabin he co-owns with a former spouse which combined could recoup around $4 million dollars, a small fraction of the almost quarter of a billion he owes. 

Meanwhile, an application will be brought later this month to have Martel declared in contempt of court which could land him in jail, assuming he can be located in Canada. 

Martel is the disgraced Victoria mortgage broker who owes 1200 investors an estimated $226 million through his company Shop Your Own Mortgage (SYOM), also known as My Mortgage Auction Corp, of which he is the sole director.

SYOM was supposedly in the business of pooling investor money to provide short term bridge loans to real estate developers. Investors were drawn in with promises of sky high rates of return, sometimes as much as 100 per cent interest on an annualized basis. 

But things started to go south earlier this year when some investors started complaining that their pay outs were taking longer and longer to materialize. Eventually the company ceased paying out investors entirely.

Over a dozen lawsuits were launched against Martel and SYOM. The lawsuits were consolidated by the court under a receivership order in early May.

A large well-appointed home with an expansive cobblestone driveway and a large garage has two cars parked outside it.
This house in Langford, B.C., is a Greg Martel assest the receiver hopes to recover. (Mike McArthur/CBC)

To date PwC has found no evidence the bridge loans Martel was selling ever existed, leading some to speculate he was running a Ponzi scheme. In an email to CBC, Martel denied the accusation.

To date, only $300,000 of the missing millions has been recovered and progress in tracking where the rest disappeared to has been slow, thanks in no small part Martel’s non-cooperation, even in the face of numerous court orders demanding he produce financial records and comply with receiver requests.

‘Misappropriated millions…’

Through it all, the whereabouts of Martel has remained uncertain, although he was rumoured to be in Thailand at one point. Currently he is not facing criminal charges although the B.C. Securities Commission has opened a criminal investigation.

A preliminary investigation by the B.C. Financial Securities Authority, which led to Martel’s suspension, found he had “misappropriated millions of dollars in bridge loan investment funds for personal benefit…”

According to PwC senior vice president Neil Bunker, financial records that have been uncovered were found to be improperly prepared and inaccurate. Bunker also told a meeting of creditors that Martel had lost about $20 million trading stocks in one TD Ameritrade account they’ve seen records for.

PwC is now working to create a “funds flow analysis” using bank statements to recreate a record of where investor funds may have ended up. 

Former offices of Shop Your Own Mortgage at 645 Tyee St. in Victoria were found vacated, according to a receiver’s report. (Mike McArthur/CBC)

Meanwhile, three Victoria-area members of parliament have asked Minister of National Revenue Diane Lebouthillier for help in dealing with fraudulent T5 tax slips issued by Shop Your Own Mortgage. The T5’s show gains investors never received, but are expected to or have already paid hefty taxes on.

‘Dependent on food banks and couch surfing’

In a letter, the three MPs say collectively they have heard from countless constituents who invested with Martel — many of whom are seniors — who have lost their homes and benefits in the fallout.

“Some now find themselves dependent on food banks and couch surfing,” says the letter, which was signed by Alistair MacGregor, MP for Cowichan-Malahat-Langford, Randall Garrison, MP for Esquimalt-Saanich-Sooke and Victoria MP Laurel Collins.

Martel’s new lawyers have applied for a constitutional exemption that would remove the obligation for him to provide documents and information to the receiver. They intend to argue that the information the court has compelled him to produce could be used against him in any criminal proceedings in the United States. 

An earlier attempt to obtain a sealing order to prevent the scant information Martel has provided from being made public was denied. 

A next hearing on the matter is scheduled for B.C. Supreme Court in Vancouver on Sept. 11 and 12.

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