Alleged Ponzi schemer Greg Martel was found guilty of civil contempt of court on Monday in Vancouver, along with a rare request from the judge that the arrest warrant be placed in the Canadian Police Information Center (CPIC) system, which would allow police and authorities across Canada, and possibly at border crossings, to know that he is a wanted man.
Martel is the disgraced Victorian mortgage broker who owes 1,200 investors $226 million. His whereabouts are uncertain, although it was rumored that at some point he was in Thailand.
In her ruling, Judge Shelley Fitzpatrick said it was clear that Martel had failed to comply with numerous court orders requiring him to produce financial records and cooperate with the court-appointed receiver, PricewaterhouseCoopers (PwC), in its work to find the missing millions. and recover assets for investors.
“It is undisputed, based on Mr. Martel’s undisputed evidence, that he has not complied with orders,” Fitzpatrick said.
If arrested, Martel will face a court hearing to determine his punishment for contempt, which could include prison time.
Monday’s hearing began with Martel’s second set of attorneys informing the court that they had resigned for “ethical reasons,” in a scene nearly identical to one in June when Martel’s first attorney resigned citing the same issue.
The change of lawyer has had the effect of slowing down the court proceedings, which began on May 4 when Martel and his company, Shop Your Own Mortgage (SYOM), were placed into bankruptcy.
SYOM was allegedly in the business of raising money from investors to provide short-term bridging loans to property developers. Investors were lured with promises of sky-high rates of return, sometimes as much as 100 percent interest on an annualized basis.
But so far, researchers have not found even the slightest evidence to support the existence of bridging loans. And Martel has only hindered his investigation.
In defending the contempt charge, PwC lawyer Peter Rubin cited a document recovered by investigators that appeared to list the beneficiaries of the loans. Martel told investigators that the names on the list were coded and that only he knew the real identities. Despite agreeing to provide the real names, he never did. Upon further investigation, PwC determined that the document was false.
In another case, Martel told investigators there was between $16 million and $18 million in a Scotiabank wealth account. According to Rubin, PwC spent a significant amount of time trying to obtain Martel’s account details, but he refused to cooperate.
“The recipient contacted Scotia McLeod and finally got Scotia McLeod to confirm that according to their records, they cannot find any such accounts,” Rubin said. “So the trustee does not believe those accounts exist, despite what Mr. Martel said.”
It also appears that Martel, in recent weeks, has violated court orders freezing his assets. Rubin said PwC knew that a mansion owned by Martel in Las Vegas had been transferred to a US creditor.
PwC has raised $600,000 from a single Canadian creditor to hire American lawyers to repossess the same Las Vegas home (and its estimated $1.5 million equity) for the group of creditors involved in the Canadian lawsuit.
So far, only $300,000 of the missing $226 million has been recovered. Martel is under criminal investigation by the BC Securities Commission.
Some investors have accused him of running a Ponzi scheme, which he has denied. A Ponzi scheme is a type of financial fraud in which early investors are paid with funds contributed by investors who buy later.
The world’s most infamous Ponzi schemer, American Bernie Madoff, was convicted of masterminding a $64.8 billion Ponzi scheme, the largest in history. He died two years ago in a US prison while serving a 150-year sentence.