Victoria mortgage broker Greg Martel has been found guilty of contempt of court and a warrant has been issued to have him apprehended.
Justice Shelley Fitzpatrick ruled Monday that Martel was guilty of contempt having breached several court orders that required him to provide information and cooperate with the receiver overseeing his bankruptcy proceedings.
“It is unquestionably the case, based on the evidence, which is uncontested from Mr. Martel, that he has failed to comply with the orders,” said Fitzpatrick in her oral reasons for judgment. “It is clear that Mr. Martel is well aware of what is required and he has chosen for reasons that are unknown to me, and I believe to the receiver’s counsel, why he has not complied with the order.”
Since PricewaterhouseCoopers took control of Martel’s My Mortgage Auction Corp. in May, Martel, who appears to be out of the country, has been uncooperative, refusing to answer questions about finances and business operations and to offer even the most basic information about the bridge-loan investment scheme most of his investors believed they were involved with.
In laying out the case for contempt, PWC counsel Peter Rubin said Martel, in defiance of court orders, has not provided an affidavit of assets, failed to provide any information to support the claims he had taken investors money to fund bridge loans and failed to provide any proof the bridge loans even existed.
The receiver has told the court on several occasions it has been stymied by Martel in its investigation of the company’s finances as it searches for what it now believes is $293 million owed to 855 investors.
Earlier estimates suggested more than 1,100 investors had entrusted $225 million to Martel.
Rubin told the court that the contempt order will not come as a surprise to anyone, least of all Martel, as the receiver has threatened to take the step for months.
“The receiver’s done everything they can, and unfortunately, we’re here on a contempt application. There’s nothing else the receiver can do,” Rubin said, adding the receiver wanted the contempt order to be shared with as many policing authorities as possible.
The contempt order will be posted on the Canadian Police Information Centre system, which should alert officers if Martel returns to Canada.
Martel could face fines or jail if and when he returns to Canada. His whereabouts are unknown, though the court has heard he has been in Thailand.
Fitzpatrick said the focus of the proceedings since early May has been on determining what assets might be available for stakeholders or investors, but despite the best efforts of the receiver very little has materialized. She noted that at every turn Martel has refused to cooperate, and knew he was defying court orders. “It is abundantly clear to me that the receiver has made substantial efforts to not only provide clarity to Mr. Martel about what was required, but also to repeatedly request the information over that period of time.”
Fitzpatrick approved applications extending the receiver’s investigating power until Feb. 28, 2024, combining Martel’s personal and corporate bankruptcies into one proceeding and approving a funding mechanism to fuel the next phase of the receiver’s work.
The investigation so far has unearthed just over $300,000, while the costs accrued by PricewaterhouseCoopers are estimated at more than $1 million. The company has yet to bill the estate for any of it.
Because there is no money available, Fitzpatrick approved a $600,000 funding agreement that will see the receiver borrow $600,000 from Robert Bertram and his company 1548199 Alberta Ltd. to pursue proceedings in the U.S. to secure control of Martel’s Las Vegas home. Bertram’s company initially brought the Martel case to court claiming it is owed $17.6 million.
Fitzpatrick noted the Las Vegas matter has “taken on increased urgency” since Sept. 6 when the receiver’s counsel was advised that Martel intended to transfer his ownership in the residence to one of his creditors.
“There has not only been a lack of cooperation from Mr. Martel, which has been the case from the outset of these proceedings, but now it appears that Mr. Martel is actively working against the efforts of the receiver and trustee to spirit assets away from these Canadian proceedings,” she said.
The receiver believes securing and selling Martel’s Las Vegas property could bring about $1.8 million to the investor pool, but court heard that will require a fight in U.S. court.
Martel is now without Canadian counsel.
Helen Sevenoaks and David Wotherspoon informed Martel last week that they were withdrawing from the case. Wotherspoon told the court Monday they did so for “ethical reasons.”
It is the second time Martel’s legal representatives have resigned. Ritchie Clark withdrew from the case in June.
>>> To comment on this article, write a letter to the editor: [email protected]
