Victoria mortgage broker Gregory Martel has been given until May 26 to co-operate with a court-appointed receiver trying to determine where millions of investment dollars entrusted to him have gone.
Madame Justice Shelley Fitzpatrick made it clear Wednesday that she has had enough of Martel’s lack of co-operation in efforts to determine the whereabouts of about $226 million in investments, although it was unclear if he would be found in contempt of court or face jail time.
Martel has been told to provide a full list of assets, banking information, transaction information and all documentation for a series of loans provided by investors to his company My Mortgage Auction.
With Martel unreachable and reportedly “out of the jurisdiction,” Fitzpatrick told Martel’s defence counsel Wednesday that he ought to emphasize to his client “that his jeopardy is becoming increasingly a matter of concern or issue in this proceeding. And this court, including myself personally, do not take failure to abide by court orders lightly.”
Fitzpatrick said she would not allow Martel “to escape compliance by alternatively providing an affidavit saying that he doesn’t have [the information] because I think it’s manifestly the case that the information that has been requested either will be in his possession or control or should be,” she said.
Peter Rubin, counsel for PricewaterhouseCoopers, suggested Wednesday that the receiver has so far been stymied by Martel.
“In my respectful view it is wholly inappropriate for Mr. Martel to suggest he doesn’t have any information concerning [My Mortgage Auction]. This is the main entity where tens of millions of dollars were invested into,” Rubin said, adding the receiver found Martel was solely responsible for the investments.
“And Mr. Martell has provided no information about what money went to whom, copies of agreements, ledgers, statements, and that is in my submission a clear breach of the existing orders, all three [court] orders.”
Fitzpatrick warned Martel’s counsel that Martel will face “significant jeopardy, legal jeopardy” if he doesn’t start co-operating.
According to a report from the receiver, Martel has failed to comply with court orders by not co-operating, not providing needed documentation or not filing a sworn affidavit of assets.
As a result, Fitzpatrick on Wednesday expanded the receiver’s investigative powers to include six other related companies to the receivership that already encompasses Martel and three of his businesses — My Mortgage Auction doing business as Shop Your Own Mortgage, Shop Your Own Corp. and Martel Investments.
The additional companies are 2289548 Alberta Ltd., Shair Your Car, Snail Team One, Snail Team Six, G&G Discount Merchandise and Martel Capital.
The court has also granted the receiver the power to assign My Mortgage Auction into bankruptcy if required, which would allow the receiver to review payments My Mortgage has already made to some investors.
Fitzpatrick directed Google to provide exclusive administrative authority to the receiver for all My Mortgage Auction email and databases. The company maintained its business records using the Google suite of business software and cloud storage.
And the court directed a number of financial institutions in the U.S. including JP Morgan Chase, Coinbase, First National Bank Omaha and TD Ameritrade to provide information to the receiver.
The increased power is meant to improve the chances of the receiver finding the investors’ money.
Hundreds of investors are waiting to find out what happened to their money, invested through Martel’s company My Mortgage Auction Corp.
According to several lawsuits, discussions with investors and the receiver’s reports, it appears Martel’s clients invested money with him on the understanding it would be used to provide 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.
The receiver has indicated there could be more than 1,205 investors, and a week ago made public a list of unsecured creditors that claim to be owed $228.6 million, plus another $234,219 US. The list noted investors are owed $226.4 million.
PricewaterhouseCoopers was appointed by the court to take control of My Mortgage Auction Corp., which does business as Shop Your Own Mortgage, after one of the investors urged the court to appoint a receiver so Martel’s business assets could be protected, reviewed and assessed for the benefit of all stakeholders.
The receiver has found very little money. Less than $300 was found in a RBC Canadian bank account. It was determined that Martel owns residences in Victoria and Las Vegas, and a number of luxury vehicles.
The receiver also found and froze Scotiabank accounts with deposits of $935.
The receiver is working on freezing other bank accounts in Canada and the U.S., has ensured a home owned by Martel in Langford cannot be sold and is working to ensure the same is true of a residence in Las Vegas.
The next court date has been set for June 9.
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