Reframing Ponzi Scheme Recoveries in Canadian Insolvencies

As part of the inaugural Canadian Insolvency Awards, the Changemaker Award was created to recognize restructurings that meaningfully advanced insolvency and restructuring practice in Canada by introducing new legal strategies or procedural frameworks. The restructuring of My Mortgage Auction Corp. and the related estates of Gregory Martel exemplified that mandate.

Emerging from one of the largest alleged Ponzi schemes to reach the Canadian courts, the case forced insolvency professionals to confront a familiar problem at an unfamiliar scale: how to fairly, efficiently, and lawfully reconcile hundreds of investor outcomes when traditional litigation tools would only deepen losses.

The collapse of a large-scale investment fraud

My Mortgage Auction Corp. operated as a mortgage brokerage platform that purported to facilitate short-term, high-yield bridge loans secured against real estate. In reality, no such loans existed. Investor funds were used to pay earlier investors, while substantial amounts were diverted to personal expenses and unrelated ventures controlled by Gregory Martel.

Between 2018 and early 2023, investors contributed more than $300 million. When the scheme collapsed, nearly 1,000 investors submitted claims exceeding $316 million. Recoverable assets were minimal, and investor outcomes varied dramatically depending on timing. Some investors had received principal and profits, others had lost everything.

The scale of the losses, combined with the number of affected stakeholders, made clear that a conventional approach of pursuing hundreds of individual clawback actions would be slow, costly, and likely futile.

A trustee-led rethink of the recovery process

Following its appointment as receiver and later trustee, PricewaterhouseCoopers Inc. undertook an extensive forensic investigation of the Martel Group’s affairs. Working with incomplete records and in the face of sustained non-cooperation, the trustee reconstructed more than 65,000 transactions across dozens of accounts and concluded that the enterprise was insolvent from inception.

Faced with the reality that estate resources could not support individualized litigation, the trustee and counsel developed a novel, court-supervised alternative. Rather than suing investors one by one, they proposed a single, consolidated process to determine liability issues collectively, while preserving the ability for individual investors to dispute amounts owing through a second-phase claims process.

“Our goal in this case was to provide answers and an equitable outcome to investors while supporting law enforcement investigations,” said Neil Bunker, Senior Vice-President at PricewaterhouseCoopers Inc. “Obtaining the Clawback Order was a game changer that will enable us to meet those goals and assist professionals who are faced with the task of unravelling future frauds of this nature.”

The strategy sought declarations that payments representing “false profits” were recoverable as fraudulent conveyances and constituted statutory preferences under the Bankruptcy and Insolvency Act.

Court endorsement of a single-proceeding framework

The Court approved the proposed approach, finding it procedurally fair, substantively sound, and consistent with the objectives of Canadian insolvency law. In doing so, it emphasized that no investor was a true “winner” in a Ponzi scheme and that equity required false profits to be shared rather than retained by chance.

The decision confirmed that insolvency courts may use summary procedures and the single-proceeding model not only as a shield for debtors, but as a practical tool to advance recoveries for creditors. It also provided clarity on the treatment of false profits and preferences in the context of large-scale investment fraud.

For investors, the framework delivered structure, transparency, and a clear path forward. For the estate, it avoided years of fragmented litigation that would have consumed the very funds the process sought to recover.

Why this case changed the practice

What distinguished this restructuring was not simply the size of the fraud, but the creativity and resolve of the professionals involved. The trustee and counsel assumed a more active role than is typical, designing a recovery strategy that balanced legal principle, procedural efficiency, and real-world constraints.

The result was a replicable model for addressing mass investor harm in insolvency proceedings, one that preserves fairness while recognizing that traditional tools do not always scale. In that sense, the case did more than resolve a difficult file. It expanded the profession’s understanding of how insolvency law can respond to modern financial misconduct.

Professionals involved

Trustee and Receiver
Neil Bunker, Senior Vice-President, PricewaterhouseCoopers Inc.
Spencer Oppal, Director, PricewaterhouseCoopers Inc.

Counsel to the Trustee
Peter Rubin, Partner, Blake, Cassels & Graydon LLP
Peter Bychawski, Partner, Blake, Cassels & Graydon LLP
Alison Burns, Associate, Blake, Cassels & Graydon LLP

About the Canadian Insolvency Awards

The Canadian Insolvency Awards recognize exceptional restructuring cases, initiatives, and contributions across the insolvency and restructuring profession. Recipients are selected by an independent judging panel based on execution, outcomes, and broader impact, with a focus on cases and team efforts rather than individual recognition.

The restructuring of My Mortgage Auction Corp. and the related estates of Gregory Martel was recognized with the Changemaker Award at the inaugural Canadian Insolvency Awards on February 5, 2026.