The courts in British Columbia will hold a hearing later this year to adjudicate disputes involving investors that are being required to pay back the profits they received from an alleged Ponzi scheme.
Last June, the Supreme Court of British Columbia ruled that investors who received returns from an alleged $300-million Ponzi scheme carried out through My Mortgage Auction Corp. (MMAC) must pay back their profits to bankruptcy trustee, PricewaterhouseCoopers Inc. (PwC), which is administering MMAC’s insolvency.
PwC is seeking to claw back the profits from “winners” in the scheme, which will be shared among all of the investors in the scheme.
It’s estimated that, while more than 1,200 investors lost a combined $149 million to the scheme, approximately 480 investors collected a combined $68.2 million in profits and another 81 investors received $3.1 million shortly before the scheme collapsed.
The court found that while the scheme’s so-called “winners” weren’t aware that they were benefiting from a fraud, they must return their profits to the trustee.
PwC reports it has so far reviewed claims for 451 of the 561 investors that are subject to the court’s clawback order. It said is in discussions with 278 investors to reach settlement agreements over the amounts they must repay — generally either to reduce the amount owed, or establishing a schedule for repayment.
Under the court’s order, if they can’t reach an agreement with the trustee, the investors can apply to the court to adjudicate the dispute. And, so far, 23 investors have applied for a review by the court.
PwC noted a hearing date will be set to “hear all of the matters in one hearing sometime over the next several months.”
Investors that have reached repayment agreements are also expected to receive amended tax slips from the Canada Revenue Agency (CRA), given that they have likely paid tax on profits that they are now being required to repay.