The B.C. Supreme Court is upholding a clawback order that was contested by a group of investors who received money from a Ponzi scheme that defrauded more than 1,200 investors of over $300 million.
At a May 16 hearing, Justice Shelley Fitzpatrick upheld a clawback order that calls for 561 investors to pay back just over $71 million they received from former Victoria mortgage broker Greg Martel, payments the estate's trustee says represent "fraudulent conveyances" and "fraudulent preferences" under the Bankruptcy and Insolvency Act.
Martel's company, Shop Your Own Mortgage, took $300 million in investments from more than 1,800 investors across the country under the guise of short-term bridge loan investments. He is currently on the run from Canadian and U.S. authorities and is believed to be living in Dubai after his 2023 deportation from Thailand.
PricewaterhouseCoopers (PwC), the trustee appointed to oversee Martel's bankruptcy proceedings, analyzed thousands of transactions and found that Shop Your Own Mortgage made no legitimate bridge loans with the investment money. Instead, new investors' funds were used to pay earlier investors while millions were diverted to "failed ventures and Martel's personal expenditures." As a result of this, most of the money has not been recovered.
"In part due to a lack of cooperation by Mr. Martel, PwC's efforts to recover funds for the benefit of the Consolidated Estate have been largely unsuccessful. Recovery remains extremely limited and all funds recovered have been used to fund the administration of the [Shop Your Own Mortgage] receivership and the Martel Group's bankruptcy proceedings," noted an application to the court.
In February, a number of investors who gained money from the scheme 香蕉视频直播� deemed "winners" by PwC 香蕉视频直播� filed an application to halt the clawback proceedings, with some mentioning in their affidavits that there would be financial hardships if they were ordered to pay back their winnings.
The court upheld the clawback order last week, though they did not provide reasoning for the decision.
Earlier this month, three investors filed to certify a class-action lawsuit against the Royal Bank of Canada and the B.C. Financial Services Authority, claiming both did not do their due diligence in investigating and intervening despite multiple complaints against Martel's businesses.
