Gordon Hoekstra in the Vancouver Sun reports that in a recent development that has stunned investors and rattled the mortgage brokerage industry, Greg Martel, a British Columbia-based mortgage broker, faces serious allegations of orchestrating a Ponzi scheme amounting to over $300 million. This case has become one of the most significant financial scandals in Canadian history, with Martel now a wanted individual, last sighted in Thailand.
The scheme, which began to unravel in fall 2022, involved hundreds of investors who had entrusted their funds to Martel’s company for short-term real estate bridging loans. These loans, typically under 90 days, were supposed to facilitate real estate development projects. Investors were initially enticed by high returns and the promise of their money being safely pooled for these temporary loans.
However, the situation took a dire turn as delays in payments emerged and investors started demanding their principal amounts back. Victoria resident Laurel Rayani, who invested over $2 million partly to support a charity she founded, expressed in an affidavit her dire financial situation due to the delay in repayment.
Amid growing concerns and investor unrest in British Columbia, Martel reportedly made lavish personal expenditures, including purchasing a $4.8 million luxury home in Las Vegas and selling another high-value property in San Diego.
Martel’s business ventures extended beyond mortgage brokering. He had a presence in the U.S., particularly in the Newport Beach area of California, where he engaged in various enterprises, including a luxury car-share company. Despite having over 50 employees and expansive business interests, Martel’s financial dealings have now come under severe scrutiny.
The allegations suggest that the returns paid to investors were not from genuine business profits but rather funded by the capital of newer investors, a classic hallmark of a Ponzi scheme. This realization has led to a flurry of lawsuits and legal actions against Martel.
The British Columbia Supreme Court appointed PricewaterhouseCoopers as the receiver to oversee Martel’s now-defunct companies, aiming to recover funds for the investors. The receiver’s report states that claims from 904 investors amount to $312 million, with potentially over 1,300 investors affected across various regions, including Alberta, California, and New York.
Martel’s bankruptcy declaration and the issuance of arrest warrants in Canada and the U.S. have added to the gravity of the situation. Despite his earlier assurances to investors about repayment, Martel fled to Thailand, evading legal responsibilities.
The receiver faces challenges in tracing the funds and the alleged bridge loans, with poor record-keeping and limited access to Martel’s extensive corporate network complicating the recovery efforts. Assets, including luxury homes in Victoria and Las Vegas, are being targeted for potential recovery.
As the investigation unfolds, investors are left in limbo, questioning the whereabouts of their funds and Martel’s current location. The case serves as a stark reminder of the risks associated with high-yield investments and the devastating impact of financial fraud on individuals and communities.
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