A lavish Las Vegas property owned by alleged Ponzi schemer Greg Martel will be sold for $5.1 million US this week after a U.S. court authorized the deal and agreements settling opposing claims on the home.
But once the dust settles on the sale of the seven-bedroom, eight-bathroom, 9,221-square-foot house, it’s unlikely any of the money recovered will reach the many hundreds of people who lost money investing with Martel.
For one, the property has an outstanding mortgage of about $4 million US, according to receiver and trustee PricewaterhouseCoopers (PwC).
In addition, PwC needs to pay back an investor who funded its legal efforts in the United States to the tune of $400,000 Cdn. PwC also says it needs to pay itself after racking up a bill of over $1 million Cdn investigating Martel, according to documents posted on its website.
Martel is the disgraced Victoria, B.C., mortgage broker at the centre of an alleged financial fraud run through his company, Shop Your Own Mortgage (SYOM), also known as My Mortgage Auction Corp.
According to the latest estimate, he owes 1,300 investors $312 million Cdn, in what an expert intimate with the details of the case said has all the hallmarks of a Ponzi scheme.
SYOM collapsed last year amid a flurry of lawsuits filed by investors. The claims were consolidated by the court under a receivership order in May of 2023 and PwC was appointed receiver with the duty to recover money and assets of Martel and his company to pay back jilted investors.
The Las Vegas property is one such asset — and a contentious one at that — requiring many months of legal machinations on both sides of the border.
In order to seize and sell the Las Vegas property, an agreement had to be reached between PwC and a group of creditors led by American Daniel Castellini, who lost $2 million investing with Martel.
Tracked down in Thailand
A sworn declaration submitted in U.S. court by PwC senior vice-president Neil Bunker detailed how in September of last year, a private investigator hired by Castellini tracked Martel down in Thailand where he was hiding out.
The investigator arranged for Thai authorities to detain Martel on an expired tourist visa, before cutting a deal that saw Martel transfer title of the Las Vegas property to Castellini, along with two Teslas and a “substantial” amount of cash.
According to Bunker, the deed for the Las Vegas property was secured through audio-visual communication on Aug. 29, 2023. Martel was released from Thai custody the next day and ordered to leave the country.
After learning that Martel had transferred the Las Vegas property to Castellini, PwC successfully argued in U.S. court that the powers previously granted in Canadian court gave PwC primary authority to recover and sell the home.
PwC then struck a deal with Castellini that says once PwC completes the sale of the Las Vegas property, Castellini will be paid $28,000 from the proceeds. The reimbursement is for “certain expenses [Castellini] represents were incurred investigating Martel and his business dealing,” according to court documents.
Court documents also say Castellini has agreed to co-operate with PwC by sharing the name of the investigator who went to Thailand, as well as all reports and information the investigator provided.
After leaving Thailand, Martel went to Dubai, according to PwC. His whereabouts are unknown.
The Las Vegas property is being sold to Kirk and Janette Mendez, who had also filed a claim on the home.
The couple signed a lease agreement with Martel in February of last year, about the time SYOM was blowing up. They agreed to pay $27,500 per month, with an option to buy the home outright for $5.1 million in February of 2024.
The Mendezes paid Martel for the year upfront but court documents say it appears he absconded with all the money.
CBC has reached out to Castellini and the Mendezes for comment.
According to PwC, two other properties owned by Martel were sold late last year as part of the asset recovery effort.
A heavily mortgaged house in Victoria sold for $2.47 million in December, resulting in $109,606 in net equity for the creditor pot. And an Ontario property Martel co-owned with a former spouse sold for $310,000, resulting in $82,698 in net equity recovered.
Last September, Martel was found guilty of contempt of court and warrants for his arrest have been issued in Canada and the U.S.
Largest Ponzi fraud in Canadian history?
Martel and SYOM were supposedly in the business of pooling investor money to provide short-term bridge loans to real estate developers, but so far investigators have found no evidence that any bridge loans were ever extended.
Martel attracted investors by promising sky-high rates of return, sometimes as high as 100 per cent on an annualized basis.
Bunker said previously that the absence of company records point to the concept that SYOM was a Ponzi scheme orchestrated by Martel.
If true, it would put him in the running for perpetrating Canada’s largest Ponzi fraud ever.
In 2017, two Alberta men were found guilty of fraud and theft after bilking investors out of a combined total of between $100 million and $400 million. At the time the RCMP characterized the crime as the largest Ponzi scheme in Canadian history.
A Ponzi scheme is where people hand over money believing it will be used in legitimate investments, often with the promise of large returns. Behind the scenes, the money actually goes toward paying earlier investors who have also been promised profits.
Quantinuum’s technologies are used today by companies including Airbus, BMW Group, Honeywell, HSBC, JPMorgan Chase, Mitsui, and Thales. In collaboration, these organizations are exploring how to engineer and scale quantum capabilities to help solve problems — from designing and manufacturing hydrogen cell batteries for transportation, to developing materials to sequester carbon safely from the atmosphere to support the world’s energy transition. Quantinuum is also working to develop Quantum Natural Language Processing, which will help enable the next generation of AI to be scalable and fit for purpose.
According to Honeywell, Quantinuum will use the funds to accelerate the path toward universal fault-tolerant quantum computers and extend Quantinuum’s software offering to enhance commercial applicability.
This capital raise represents Quantinuum’s first equity funding round since the company formed through the merger of Cambridge Quantum Computing and Honeywell Quantum Solutions in November 2021.
This investment brings the total capital raised by Quantinuum since inception to approximately $625 million.
When you lease a vehicle, you never really own it — the dealer does. So you might think that you have no equity in the vehicle.
But you’d be wrong.
In fact, if you are currently leasing a car, even if you are just a year in and have several years to go, you might be able to get out of the lease and walk away with several thousand dollars.
So how is this possible?
An auto shortage means higher prices for used cars
The fallout from COVID-19 continues to cause supply chain shortages in multiple industries. With steel and computer chip shortages, the automotive industry has not been immune.
That means fewer new cars rolling off assembly lines and thus a larger demand for used cars. The problem? Dealerships cannot keep up with this demand.
Megan Stewart of Cincinnati recently purchased a new Toyota RAV4, but the dealer was so desperate for used cars, there was an unusual stipulation to the deal.
“When I went to buy a new RAV4, the dealership would only make a deal if I agreed to trade in my 2015 Honda Civic,” Stewart says. “They said they couldn’t handle the loss of a single vehicle on their lot, given the major shortages going on.”
And that’s no isolated incident. In January 2019, there were just under 3 million used cars available in the U.S. And earlier this fall? It was down to 2.3 million for a loss of nearly 33 percent.
To put it bluntly, “dealers are hurting for inventory,” says Kyle Johnson, senior editor for The News Wheel.
To make up for the massive deficit of used cars, dealerships have resorted to emailing lessees with whom they are currently under contract, offering to end the lease early and pay a pretty sum for a buyout. San Francisco’s ABC 7 told a story of a woman offered $6,000 to end her lease early.
How to make money off your leased car
The amount of money you pay for a leased vehicle over the duration of the contract is typically the difference between the car’s initial value and the estimated residual value at the end of the lease term. In that sense, you are merely renting a vehicle from a dealership, and at the end of the contract, the dealership intends to sell the vehicle as a used model.
But what’s happening right now is that leased vehicles are worth considerably more than they were originally estimated to be at the end of their terms. As a lessee, even though you don’t own the vehicle, you hold all the power because that increased equity belongs to you … if you handle the end of the lease strategically.
According to Cars Direct, the top five selling cars of 2018 are being sold used for 40 percent more than what would have been expected pre-pandemic. For example, a 2018 Nissan Altima has a nearly 50 percent market value increase, which translates to a more than $6,000 jump. Think about that if you are turning in a 2018 Altima this year.
The No. 1 advice we can give: If you are currently leasing a car, do not just turn it in at the end of a lease as originally planned.
You will be leaving money on the table if you do. Instead, explore one of these options for making money off your leased car:
1. Sell the lease to a third party
An option that lessees have long exercised during their leases has been selling their leases to a third party, like Carvana, Vroom or CarMax. For example, you could take your leased 2020 Honda Pilot and sell the vehicle — lease agreement and all — to CarMax. You’d immediately stop making payments, and you’d have a nice check if the vehicle was able to fetch enough money to cover the rest of your payments and then some.
And because of the huge demand for used cars, your lease vehicle should easily be able to command a large amount of that “and then some” cash when you sell it to a third party.
However, directly in response to the used car shortage, many lenders (branches of the automakers themselves) have begun to put a stop to this, legally prohibiting lessees from selling their contracts to third parties. Instead, they either have to return the vehicle to the dealership or buy it from the dealership at the end of the lease.
As of right now, Leasehackr is reporting that the following lenders are prohibiting third-party lease sales:
- Acura Financial Services
- BMW Financial Services
- Ford Credit
- GM Financial
- Honda Financial Services
- INFINITI Financial Services
- Lincoln Automotive Financial Services
- Mercedes-Benz Financial Services
- MINI Financial Services
- Nissan Motor Acceptance CompNY
- Southeast Toyota Finance
- Volvo Car Financial Services
- Tesla Finance
We expect this list to grow as the used car shortage continues.
2. Buy the car and sell it
Don’t let automakers have the final say. An easy enough way around the prohibited third-party lease sales is to simply buy the car from the dealership at the end of your lease and then turn around and sell it to whomever you want.
In fact, this gives you more earning potential. Once you own the car, you can see what CarMax or Carvana will pay for it, but you can also try to sell it privately for even more money.
To determine how much your vehicle is worth, try out Kelley Blue Book, which can estimate the value of your car based on model, year, features and condition. You can also check out dealer websites to see how much similar vehicles are selling for.
The beauty of buying the leased vehicle from the dealer at the end of your lease is that they can’t jack up the price. Check your lease agreement for the lease buyout wording; in it, the dealership should have spelled out exactly what you will pay to buy the car from them. This is called the guaranteed purchase option price.
A word of caution: You will need to pay sales tax and title fees when purchasing the leased vehicle, and if you can’t immediately sell the car, you need to be okay with the money you spent to buy out the lease being unavailable until the vehicle sells.
A second word of caution: This strategy applies to a lease buyout at the end of a lease contract. Early buyouts typically do not have guaranteed purchase option prices, meaning the dealer can charge you more for the vehicle. There may also be an early buyout fee.
3. Sell the lease back to the dealer
If you’re fortunate, you may not have to do much work at all. Don’t scoff when your dealer calls asking to buy you out of a lease early. Take a look at the offer, calculate what you think you could make trying to sell the vehicle on your own and determine if just simply selling the lease to the dealer is the right move.
Chances are good you may leave a little money on the table this way, but it’s certainly much less of a hassle to just sell to the dealer than buying the vehicle and selling privately.
Alternatively, you could try other nearby dealerships that sell vehicles of the same make. They may offer you more than the dealer from which you leased the vehicle. That’s the beauty of driving a leased vehicle in this shortage; you have the power to start a potential bidding war.
“Prices are way up,” confirms Johnson. “That car you leased a while back could actually net you a nice profit if you find a dealership that wants to come to the table and strike a deal with you.”
What to consider before selling your leased car
Now is a great opportunity to make some quick and serious cash by selling your lease. But before you sign on the dotted line, consider a couple of caveats:
You may be without a car
If you are not part of a multicar family and do not have access to affordable and efficient public transportation, getting rid of your vehicle may not be the right move.
New and used vehicle prices are at record highs
If you do sell and need to replace the vehicle with something new, be ready to pay those premium prices that you were charging when selling your lease. What goes around comes around.
In fact, some experts say that taking advantage of dealership incentives for ending leases is a bad idea for this very reason. “My recommendation would be: don’t do it,” says Kyle MacDonald, Director of Operations at Force by Mojio. “No matter how much you can earn in the moment, with the state of the market right now, there’s no guarantee you’d be able to find a replacement easily.”
MacDonald does offer one exception: “If you’ve already locked down a new car to purchase, in that case, ending a lease a month or two early may be worth the cash incentive.”
You leased that car because you liked it
Finally, consider if you’re ready to part with the car. At the end of the day, you work hard for a paycheck that affords you nice things. If a car to you is just a way to get from point A to point B and you couldn’t care less what make and model you’re sitting in, sure, end the lease.
Timothy Moore covers bank accounts for The Penny Hoarder from his home base in Cincinnati.