The receiver in charge of the Gregory Martel/My Mortgage Auction Corp. receivership proceedings has painted a bleak picture of the state of the company’s finances and suggested chances are slim investors will be paid back quickly.
Neil Bunker, senior vice president with court-appointed receiver PricewaterhouseCoopers, gave that assessment Friday at a virtual town hall meeting with investors. He told about 500 people affected by the Martel receivership that the receiver has found little money so far, while investors appear to be owed more than $226 million.
The receiver made public Friday a list of 55 unsecured creditors that totals $228.6 million, plus another $234,219 US. The list lumped together all investors as one creditor owed $226.4 million and all employees as one owed $73,430.
Friday’s 90-minute town hall meeting covered the role of the receiver and its plan to find all of the company’s assets. Investors asked questions on everything from Martel’s whereabouts to whether the business qualifies as a Ponzi scheme. A Ponzi scheme is an investment fraud that pays existing investors with money from new investors.
In a statement provided to the Times Colonist on Friday, Martel said My Mortgage Auction “is not insolvent nor, as has been alleged, is it a Ponzi scheme.”
“Our business grew exponentially during 2022 and that led to difficulties with staff and administration. However, we went through an extensive reconciliation exercise at the end of 2022, and it clearly showed that My Mortgage has the contracts and the ability to enable all investors to recoup their investments,” he said.
At the town hall meeting, Bunker reiterated what many of the investors would have heard in court — the receiver has found less than $300 in a Canadian bank account, and determined that Martel owns residences in Victoria and Las Vegas and a number of luxury vehicles.
He said the court is likely to uphold the receivership proceedings when they return to court next week.
Madame Justice Shelley Fitzpatrick granted an adjournment until May 17 to allow Ritchie Clark, counsel for Martel’s company, to get adequate instruction and familiarize himself with the case.
Bunker said when they head back to court, the receiver may ask for expanded scope for its investigation, depending on whether or not Martel complied with a court order to produce an affidavit and asset list by 4 p.m. on Friday.
Bunker told investors that Martel and My Mortgage Auction Corp. will have a chance to explain to the court why the receivership is unnecessary.
“From what I see, in terms of the evidence that I’m aware of, I think that the company is going to have a very hard time suggesting the receivership is not appropriate unless they come to court with proof that they’ve got all the investors’ money,” Bunker said.
At this point, the court has given the receiver power to investigate Martel Investments Ltd., Shop Your Own Mortgage Corp, My Mortgage Auction doing business as Shop Your Own Mortgage, as well as Martel himself.
That allows the receiver to freeze the assets of Martel and the four companies and compel related companies and individuals to provide information about their financial dealings.
Bunker told investors that to this point, Martel has not been co-operative, which has meant the receiver has been forced to work with superficial documentation, which has made it difficult to trace where the investment money went.
The court acted when one of Martel’s investors, an Alberta company that claimed to have invested more than $17 million with him, said neither Martel nor his company has made payment for outstanding amounts due under investment agreements
The Alberta firm urged the court to appoint a receiver so Martel’s business assets could be protected, reviewed and assessed for the benefit of all stakeholders.
Since the first lawsuit was filed in April, several others have followed. Each lawsuit claims an individual or company invested money with Martel on the understanding the money would be used to provide short-term bridge loans for commercial and residential real estate deals.
