Court Orders Recovery of $21.5 Million in “Winner” Profits in Grozelle Ponzi Scheme Bankruptcy

Counsel to Grant Thornton Limited, in its capacity as Trustee in Bankruptcy of Douglas Grozelle, with respect to the successful recovery of $21.5 million in fictitious profits from "net winner" investors.

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On February 9, 2026, in a significant decision for Canadian insolvency law, the Ontario Superior Court of Justice has released its Reasons for Decision in the Bankruptcy of Douglas Grozelle (2026 ONSC 758).

The Court granted a motion brought by Grant Thornton Limited, in its capacity as the Trustee in Bankruptcy of Douglas Grozelle, to claw back approximately $21.5 million in made-up “interest” payments from 120 “net winners.” The recovered funds will be used by the Trustee to compensate 116 victims who lost their principal investment in the scheme.

From 2021 to 2023, Douglas Grozelle operated a fraudulent Ponzi scheme under the guise of a short-term real estate bridge loan business. The scheme involved a “churn” of $103 million in bank transactions, promising investors exorbitant annualized interest rates some as high as 18,250%, which were paid using funds from subsequent investors.

Key Findings

  • Fraudulent Conveyance: Justice FL Myers ruled that payments exceeding the return of principal were void against the Trustee under the Fraudulent Conveyances Act, as they were intended to defraud, delay, and hinder other creditors.
  • Insolvency from Inception: The court reaffirmed that Ponzi schemes are deemed insolvent as a matter of law from the moment they begin.
  • Substance Over Form: The court rejected arguments that the investments were “legal loans,” finding that the promissory notes were merely marketing tools for a dishonest scheme.

The Trustee’s investigation identified 236 total investors. While 116 investors suffered a combined loss of $24.5 million, the 120 “net winners” received $49.9 million, representing their full principal plus an additional $21.5 million in profit. The court’s order ensures a fair sharing of assets by requiring these “winners” to return the fictitious profits to the bankrupt estate managed by Grant Thornton Limited.

Miller Thomson represented Grant Thornton Limited (Trustee in Bankruptcy) with a team comprised of David Ward, Mryam Sarkis, and Armando Ranjbar.