Disgraced Victoria mortgage broker found guilty of civil contempt as warrant issued for his arrest
Alleged Ponzi schemer Greg Martel was found guilty of civil contempt of court Monday in Vancouver, along with an uncommon request from the judge that the warrant for his arrest be placed in the Canadian Police Information Centre (CPIC) system, which would allow police and authorities across Canada, and possibly at border crossings, to be aware he is a wanted man.
Martel is the disgraced Victoria mortgage broker who owes 1,200 investors $226 million. His whereabouts are uncertain, although he was rumoured to be in Thailand at one point.
In her ruling, Justice Shelley Fitzpatrick said it was clear Martel has not abided by numerous court orders compelling him to produce financial records and co-operate with court-appointed receiver PricewaterhouseCoopers (PwC) in its work to find the missing millions and recover assets for investors.
"It is unquestionably the case, based on the evidence that is uncontested from Mr. Martel, that he has failed to comply with the orders," said Fitzpatrick.
If apprehended, Martel will face a court hearing to determine his punishment for contempt, which could include jail time.
Monday's hearing began with Martel's second set of lawyers informing the court they had resigned for "ethical reasons," in a scene almost identical to one in June when Martel's first lawyer stepped down citing the same issue.
The change of counsel has had the effect of slowing court proceedings, which began on May 4 when Martel and his company, Shop Your Own Mortgage (SYOM), were put into receivership.
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.
Greg Martel and his company, Shop Your Own Mortgage, also known as My Mortgage Auction Corp., promised huge rates of return to investors. (VIMEO)
But so far, investigators have not found a shred of evidence supporting the existence of the bridge loans. And Martel has only stymied their investigation.
In arguing for the contempt charge, PwC counsel Peter Rubin cited a document recovered by investigators that appeared to list loan recipients. Martel told investigators names on the list were coded and that only he knew the real identities. Despite agreeing to provide the true names, he never did. Upon further investigation, PwC determined the document was bogus.
In another instance, Martel told investigators there was $16 million to $18 million in a Scotiabank Wealth Account. According to Rubin, PwC spent a significant amount of time trying to get the account details from Martel, but he declined to co-operate.
"The receiver did contact Scotia McLeod and finally got Scotia McLeod to confirm that, based on their records, they can't find any such accounts," said Rubin. "So the receiver does not believe those accounts exist, notwithstanding what Mr. Martel said."
It also appears Martel has, in recent weeks, breached court orders freezing his assets. Rubin said PwC was aware a mansion owned by Martel in Las Vegas has been transferred to an American creditor.
PwC has raised $600,000 from a single Canadian creditor in order to hire U.S. lawyers to recover the same Las Vegas home — and its estimated $1.5 million in equity — for the group of creditors involved in the Canadian lawsuit.
So far, only $300,000 of the missing $226 million has been recovered. Martel is under criminal investigation by the B.C. Securities Commission.
Some investors have accused him of running a Ponzi scheme, which he has denied. A Ponzi scheme is a type of financial fraud where early investors get paid out with funds put in by investors who buy in later.
The world's most infamous Ponzi schemer, American Bernie Madoff, was convicted of masterminding a $64.8-billion Ponzi fraud, the largest in history. He died two years ago in a U.S. prison while serving a 150-year sentence.
