A mortgage broker in Victoria ran a Ponzi scheme, appointed a trustee | CBC News

British Columbia. To date, more than 930 creditors have filed claims against Greg Martel, totaling $317 million. Documents show that Greg Martel lavishly spent funds on private jets, cars, rental homes, watches, and wine. An analysis conducted by PricewaterhouseCoopers (PwC) revealed that his company, My Mortgage Auction Corp., operated like a financial pyramid. The bankruptcy proceedings of the infamous Victoria mortgage broker Greg Martel uncovered that he managed a "massive" financial scheme that allowed him to lead a luxurious lifestyle.

According to documents from the appointed trustee and curator PricewaterhouseCoopers, the analysis of the cash flow into and out of Martel's company, known as My Mortgage Auction Corp. (MMAC) or Shop Your Own Mortgage, indicated that none of it was used to fund mortgage loans as advertised. PwC found that the loans sold by Martel did not actually exist. Instead, the money received from investors was used to pay earlier investors, funneled into his other companies, or used to cover significant operating expenses over the five years from 2018 to 2023.

PwC also reports that some aspects of its bankruptcy are related tounjustified spending for personal needsincluding:

• 3.1 million dollars for travel, including private jet charters and hotel accommodations;
• 3.1 million for the purchase or rental of cars;
• 1.1 million dollars for renting several houses;
• $261,000 for meals and events at restaurants;
• 200 thousand for watches and jewelry;
• 150 thousand for vacation, including massages and resorts;
• 59 thousand for fitness and sports, including sports goods and golf course fees;
• 50 thousand for wine and participation in winemaking events.

Financial pyramid— this is a form of fraud where initial investors receive payouts from the funds contributed by later participants. Martel attracted investors by promising high interest rates, sometimes reaching up to 100% per year.

According to PwC, Martel has spent his funds very generously, spending on private jets, renting houses, cars, jewelry, and wine. MMAC collapsed last year when several investors filed lawsuits claiming they were owed money. All lawsuits were consolidated by the court under an order appointing a trustee in May 2023, and PwC was appointed to recover funds and assets to compensate the affected investors. To date, more than 930 creditors have filed their claims against Martel for a total of $317 million.

The CBC News service spoke with one of the first investors in MMAC, who stated that the results of the PwC analysis did not come as a surprise to him. Bruce Smeed from Edmonton noted that he invested twice in 2018 but later suspected foul play and withdrew his funds. "I was the first investor, and when the situation started to look suspicious, I decided to take my money out," he said. "It took me a long time to get my investment back." Smeed added that Martel promised increasingly higher returns. "I thought, 'This is too good to be true. I need to get out while I still can,'" he said.

Martel has never cooperated with trustees or courts, and last year he was found guilty of contempt of court. Arrest warrants have been issued for him in both Canada and the United States. According to reports, he was in Thailand and Dubai, but his current whereabouts remain unknown. PwC assures that it does not expect investors to recover any funds from the bankrupt estate. It is also reported that the British Columbia Securities Commission and Victoria police are conducting an investigation. CBC News has attempted to contact Martel several times over the past year. In a statement sent to CBC News last May, he denied running a Ponzi scheme.

ABOUT THE ARTICLE

The author of this article is Karin Larsen, a former Olympic athlete and award-winning sports commentator who covers news and sporting events for CBC Vancouver.