Investors who entrusted millions to Victoria mortgage broker Greg Martel have lost a little more hope that they will recover their money after the receiver overseeing proceedings painted a very bleak financial picture during a court appearance Friday.
Peter Rubin, counsel for PricewaterhouseCoopers, had little new financial information for the more than 1,200 investors wondering what happened to about $226 million they entrusted to Martel.
As he took the court through the receiver’s fourth report into Martel’s activities, Rubin noted Martel still remains evasive when it comes to answering direct questions about where the money was invested and has not co-operated fully with the receiver’s investigation. Rubin said the investigation has turned up very little in terms of assets or cash that could be used to pay back investors.
The receiver has been digging for a month to find out what happened to about $226 million that investors sank into Martel’s company My Mortgage Auction Corp. to fund short-term bridge loans for commercial and residential real estate deals. The money was to be repaid with high interest.
Many of the investors claim they have been waiting months for repayment.
One investor who asked not to be named said it has been an ordeal, and it’s disheartening that Martel has not provided any documentation supporting the existence of the bridge loans.
An out-of-province investor added that it’s starting to become more clear that the investment scheme likely didn’t exist in recent months and the money was spent elsewhere.
Martel, who was again absent from court proceedings Friday, was represented by a different lawyer after Ritchie Clark, who had been representing Martel and his company My Mortgage Auction Corp., withdrew for ethical reasons.
“We’re lawyers and we act for people no matter what they’ve done … my ethical reasons do not reflect a view of Mr. Martel and his conduct in these proceedings other than with respect to my retainer,” Clark said.
Helen Sevenoaks and David Wotherspoon were appointed to represent Martel late Thursday evening.
Madame Justice Shelley Fitzpatrick told the new counsel that while they will have time to get up to speed on the proceedings, the key thing is to get Martel to co-operate.
“The critical part is to have Mr. Martel start telling us what he knows, so that we can understand what’s happened here,” she said, ahead of granting an order that will allow PricewaterhouseCoopers to serve Martel with papers and motions via email rather than in person.
During the two-hour court session, Rubin noted that despite direct appeals to Martel during video calls and email exchanges, Martel still has yet to offer a single document to back up any of the bridge loans.
“To date, the receiver has found no loan agreements to support the bridge loans,” Rubin said. “At the end of the day, unfortunately, it looks like the receiver’s going to have to bring a contempt application.”
Rubin said that is a last resort if the receiver continues to hit a wall in trying to get the documentation.
The one promising bit of information the receiver unearthed was what looked like a list of borrowers and investment opportunities.
“At first blush, when someone looks at the schedule, it looks positive, but when you look at the schedule and the information that’s on the schedule, the receiver has not been able to validate the existence of any of these loans,” Rubin said.
The receiver’s investigation into its veracity suggests a number of the loans were fabricated. Within days of PWC sending out 15 notices directing apparent borrowers to repay, the receiver was contacted by five of them saying they had never borrowed money from My Mortgage or Martel.
Rubin said the receiver intends to undertake a funds-flow analysis when it gets more banking information in the hope it will be able to determine whether or not any of the bridge loans exist.
The receiver continues to dig through Martel’s personal and company financial records looking for assets and any kind of documentation that will explain what happened to the money.
To date it has turned up very little.
The receiver’s fourth report noted it has located three residential properties that could net $1.75 million, as they are encumbered by an estimated $7.3 million in mortgages, there is no equity available in Martel’s vehicles and he has an estimated $3.49 million in unsecured debt.
As for company investments Martel included in a partial list of assets, the receiver rates them as worthless as “there is no substantial evidence provided to validate the value of the investments.” For example, Martel valued his company CarShair at $25 million, with the potential of being worth $20 billion in a few years.
But the receiver’s investigation revealed many of the vehicles linked to the company were owned by either Martel or another Martel company and many have been repossessed.
The report said CarShair’s 2021 tax return showed it lost $4.5 million that year and had accumulated losses of $5.9 million. Former CarShair employees advised that the company had only one to five bookings a week and the business continued to incur losses.
Rubin said he holds out hope that with new counsel Martel will provide the needed information. “The goal here is to get the details concerning these bridge loans and get this money recovered for the investors,” he said.
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