Publication ban denied in the case of B.C.'s Greg Martel and the missing $226M

The whereabouts of Greg Martel remain unknown, as does the location of the $226 million he owes to over a thousand investors, but that didn't stop the Victoria mortgage broker from seeking a publication ban on scant information provided months ago to investigators charged with finding out where all the money went.

In B.C. Supreme Court in Vancouver on Wednesday, Martel's lawyers argued that details he revealed about business dealings and some bank accounts pose a serious risk to his constitutional right against self-incrimination. They claimed the information, which has been posted publicly online for months, could put Martel in criminal jeopardy in the U.S. in light of a recently-launched Nevada civil suit that accuses him of fraud.

But Madame Justice Shelley Fitzpatrick denied the ban application in no uncertain terms, stating that investors have a right to know details that come to light about where their millions disappeared to.

"In my view, this is like closing the barn door after the horse has left," she said. "There are significant public interests at play here. These investors have invested a significant amount of money, and Mr. Martel ...has provided what's been described as only minimal information."

Martel and his brokerage, Shop Your Own Mortgage, were put into court-ordered receivership on May 4 after a number of investors launched lawsuits claiming they were owed money.

The company was purportedly in the business of extending bridge loans to real estate developers using money pooled from investors who were promised huge rates of return, sometimes over 100 per cent on an annualized basis.

The bridge loans make up the majority of the asset value, but receiver Pricewaterhouse Coopers (PwC) says Martel and his legal counsel have not provided any information to support the existence of any bridge loans. 

Some investors have speculated Martel was running a Ponzi scheme, which he has denied. 

Victoria Police and B.C. Securities Commission have both started criminal investigations. Martel has not been criminally charged in either Canada or the U.S. and denies any criminality.

PwC's efforts to untangle the financial mystery and recover assets have not gone well. A report to the court published on Tuesday notes Martel's continued lack of co-operation and non-compliance with court-ordered disclosure requirements.

Martel was also found to mingle money between a network of companies he owned in Canada and the U.S., including a peer-to-peer luxury car share business called CarSHAiR that was found to be millions of dollars in debt.

To date, only $302,000 of the missing $226 million has been recovered.

With such meagre findings and PwC yet to be compensated, the receiver is now asking jilted Martel investors to donate cash to the tune of $400,000 for a legal initiative aimed at gaining standing in the Nevada courts. The goal is to secure and liquidate a 9,000-square foot, seven-bedroom, eight-bathroom Las Vegas mansion owned by Martel that has an estimated $1.8 million in equity.

Documents posted on the PwC website say the "Vegas Recovery Initiative" requires funding "... to pursue this potential recovery for the benefit of all investors," although there is no guarantee of success.

The American investors who have already filed their lawsuit in Nevada are also seeking to seize and liquidate the mansion as an asset against their losses.

Licensed insolvency expert David Wood said there are provisions for U.S. courts to recognize Canadian court orders and vice versa.

"Bed, Bath and Beyond was probably one of the more recent ones where that happened," said Wood of Boal Wood and Company. "The bottom line is this: if [investors] don't fund the initiative, they're guaranteed to get nothing."

On Wednesday, the court heard that a person currently leasing the Vegas property paid Martel a full year's rent of $330,000 this past February, money the receiver has not recovered.

The leaseholder also has an option to buy the property at 28 Quiet Moon Lane for $5.1 million, the court heard, and have themselves filed a complaint now that the home is tied up in legal wrangling.

In a related development, an application filed by a Victoria-based investor is asking the court to put Martel into personal bankruptcy to allow for the seizure and liquidation of a house he owns on Bear Mountain in Langford.