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Greater than 1,300 buyers have claimed they misplaced greater than $312 million within the scheme, in accordance with courtroom information in B.C. and the U.S.
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B.C. monetary regulators obtained complaints about accused fraudster Greg Martel, together with {that a} high-return funding alternative could be a “rip-off,” years earlier than his alleged $300-million Ponzi scheme collapsed in 2023.
The complaints about Martel’s funding schemes had been made to the B.C. Monetary Companies Authority and the B.C. Securities Fee in early 2017 and mid-2021, in accordance with monetary companies authority data obtained by Postmedia by means of a freedom of knowledge request.
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On studying complaints had been made effectively earlier than the scheme collapsed, one investor, Kelly, who wished to be recognized solely by her first title, mentioned if regulators had dug deeper perhaps buyers may have saved tens of tens of millions of {dollars}. She acknowledged the regulator is just not 100 per cent accountable for cash she invested, as she has to personal a few of that duty.
However Kelly, whose household misplaced $1 million within the alleged Ponzi, mentioned: “I get offended once I hear that individuals have filed earlier complaints and nothing was achieved about it. I get very offended.”
In the summertime of 2021, greater than 18 months earlier than buyers started suing Martel and the scheme got here to public consideration, two complaints to the monetary companies authority outlined considerations over a bridge-loan funding scheme. It’s the identical one which collapsed within the spring of 2023, and which buyers and chapter receiver PricewaterhouseCoopers now imagine was a Ponzi.
Hundreds of thousands continued to be invested within the scheme after the 2021 criticism up till Could of 2023, B.C. and U.S. courtroom data present.
If Martel’s scheme proves to be a Ponzi, it might be the most important in B.C. and one of many largest in Canada.
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The 2017 criticism was over short-term investments in properties in Japanese Canada.
The monetary companies authority regulates entities equivalent to credit score unions and insurance coverage corporations in B.C., in addition to mortgage brokers. Martel, 47, had been a mortgage dealer since 2006 in Victoria.
In response to Postmedia questions, the monetary companies authority says it investigated the complaints in 2017 and 2021 and located no wrongdoing underneath the legal guidelines for which they’re accountable.
The monetary companies authority “decided, primarily based on the proof, that there was no breach of necessities underneath the Mortgage Brokers Act,” Raheel Humayun, director of investigations, mentioned in a written assertion.
The authority didn’t make somebody out there for an interview.
It started one other investigation in April 2023 into non-compliance with the Mortgage Brokers Act after receiving extra complaints about Martel and his firm Store Your Personal Mortgage, often known as My Mortgage Public sale. The authority mentioned it referred potential securities associated data to the securities fee. The authority mentioned it later realized the Victoria police had began a felony investigation. These actions got here after the alleged Ponzi had collapsed.
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The monetary companies authority didn’t reply questions on whether or not it adopted up with the securities fee or police on the 2017 and 2021 complaints.
Humayun mentioned their investigations, by legislation, are restricted to actions inside the jurisdiction of the monetary companies authority.
Matt Malone, an assistant legislation professor at Thompson Rivers College, says for the monetary companies authority to function a contemporary, efficient and environment friendly shopper safety regulatory physique, at minimal, it ought to publish extra knowledge displaying the variety of mortgage dealer complaints, the proportion of complaints which are well-founded, not well-founded, deserted by the complainant, referred to police or different authorities, or not investigated by the authority.
“British Columbians deserve a greater look into what complaints the (monetary companies authority) is — and isn’t — investigating,” mentioned Malone, who has experience in regulatory oversight.
In each the 2017 and 2021 instances, the monetary service authority data present complaints had been additionally made to the B.C. Securities Fee, which regulates B.C.’s funding markets.
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The B.C. Securities Fee wouldn’t reply whether or not it knew of the 2017 and 2021 complaints, if it had investigated them, what any investigation discovered or whether or not it took motion. The fee additionally wouldn’t reply whether or not it handed on considerations in 2017 or 2021 to different regulatory our bodies or the police.
“As this matter is the topic of an energetic felony investigation, we can not focus on any actions we took, past confirming that an investigation is in progress,” B.C. Securities Fee spokesman Brian Kladko mentioned in a written assertion, referring to its personal felony investigation began after the scheme collapsed.
Postmedia additionally filed a freedom of knowledge request for securities fee data of complaints associated to Martel and his corporations again to 2017.
In a response this week, the B.C. Securities Fee mentioned there have been dozens of data however withheld all of them, citing numerous sections of the B.C. Freedom of Data and Privateness Act. These sections included that the discharge of the data could be dangerous to legislation enforcement, intergovernmental relations, third-party enterprise pursuits, private privateness, coverage recommendation and solicitor-client privilege.
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Within the alleged Ponzi, by the top of 2023 greater than 1,300 buyers claimed they misplaced greater than $312 million, in accordance with courtroom information in B.C. and the U.S.
Many buyers had been from the Victoria space, different components of B.C. — together with Vancouver — plus Alberta, California and New York.
Thus far, receiver PricewaterhouseCoopers has collected lower than $200,000 and has been unable to search out any proof the bridge loans existed. Martel, who spent most of his time within the final a number of years within the Newport Seashore space in California, was final seen in August in Thailand. He has since disappeared.
In these schemes — named after Nineteen Twenties-era fraudster Charles Ponzi — earlier buyers are paid off with later buyers’ cash and never from the earnings of any actual enterprise.
The closely redacted data from the monetary companies authority present on July 8, 2021 a complainant informed the B.C. Monetary Companies Authority he was referred to Store Your Personal Mortgage on an funding in short-term mortgages that might return in extra of 10 per cent month-to-month. “His major concern is that if the provide is respectable or it is a rip-off,” say notes from a compliance officer.
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The compliance officer confirmed that Martel was a mortgage dealer however may provide no opinion to the complainant on the “veracity” of the funding alternative, in accordance with the case file.
The compliance officer famous the provide was for the complainant to spend money on a $4.2 million short-term advance to finish a multi-family growth, which seemed to be a syndicated mortgage, which the corporate was not permitted to do.
The authority was informed by an organization consultant, whose title is redacted, they aren’t promoting or soliciting mortgage funding enterprise. As an alternative, the alternatives are offered as brief period bridge loans to people and builders that aren’t registered with Land Titles — which means they aren’t a mortgage secured towards a property. “Says this exercise has been vetted by the (B.C. Securities Fee) and is compliant with their laws,” the compliance officer famous.
A second criticism got here on Aug. 27.
The complainant mentioned the corporate pitching the short-term, high-return bridge loans got here throughout his desk from considered one of their buyers.
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The complainant flagged the provide as odd, saying it’s three to 4 instances what the business is promising to buyers.
“To provide you a easy analogy, this could be like BMO quoting typical mortgages at 10% when TD, RBC, Coast Capital are charging 2% for a similar product. This doesn’t go the odor check on a number of ranges. Brokers wouldn’t take shoppers right here and arguably these people wouldn’t be doing any enterprise as a result of their pricing is WAY off market. I’ll go away it to your crew to look into,” mentioned the complainant in an e mail to Ina Shoemaker, director of mortgages for the monetary companies authority.
The complainant included samples of the short-term bridge mortgage affords in 2021.
One was for a $7.1 million bridge mortgage (for an house constructing in Victoria) providing a 16 per cent return over 14 weeks and one other for $1.875 million (for 3 Shawnigan Lake houses) providing a 22 per cent return over 4.5 months.
Each quantity to a virtually 60 per cent return yearly.
The result of the monetary companies investigation, accomplished on Jan. 28, 2022, was cited as “impartial” within the case file.
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Within the end result, underneath the heading “Warning Flags to Stay?” the monetary service authority checked off “No.”
The 2021 case file features a reference to the 2017 file.
In that file, a criticism on Feb. 7 was directed towards Zilla Capital for taking cash to spend money on properties for the brief time period in Japanese Canada, the place the complainant had not seen any returns. The complainant had additionally claimed {that a} consultant of the corporate (the title is redacted) could not be capable of do one of these funding.
The criticism outlines that in 2016, $525,000 was lent for a three-month interval, with $200,000 reinvested for one more two-month interval. “A number of communications from the topic with excuses for nonpayment,” says the case file.
Later, the complainant withdrew their criticism on March 13, saying they had been made “because of misunderstandings between the complainant and Zilla Capital.
A couple of days later the file was closed with the end result labelled as “deserted.”
Zilla Capital’s administrators in 2017 had been Martel and Avdeep (Av) Singh Hundle, in accordance with B.C. firm registry data.
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In an interview, Hundle, now a mortgage dealer in Kelowna, mentioned he and Martel shaped the corporate however he by no means had something to do with it.
Hundle was eliminated as a director in April 2018, in accordance with registry data. Hundle says he ceased to be a director in 2016.
“It was all his child, no matter it was about,” mentioned Hundle.
Advisable from Editorial
He’s accused of operating a $300M Ponzi scheme. Now he’s vanished. Who — and the place — is Greg Martel?
Trustee in accused B.C. fraudster’s chapter has collected lower than $200,000
‘New actuality, new life’: Buyers lose enormous sums in Greg Martel funding schemes
ghoekstra@postmedia.com
twitter.com/gordon_hoekstra
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