March 20, 2007
There's a RCMP office in Vancouver
overrun with paper, files, statements and balance sheets, and the
infestation is getting worse.
The stacks of paper documents and megabytes of electronic data continue
to pile up on and around the desks of the RCMP's Integrated Market
Enforcement Team as they wade through the investigation into former
Victoria investment adviser Ian Thow.
Thow fled the country amid allegations he owed in excess of $37 million
to clients and creditors after convincing them to invest in schemes that
ranged from a Jamaican bank to loans for Vancouver developers and seed
shares with his former employer.
The former vice-president of Berkshire Investment Group left the company
at the end of May 2005, filed for bankruptcy in Canada and the U.S. and
He has been living in Seattle since August 2005, avoiding 73 former
clients and unsecured creditors.
The RCMP have been working on the Thow file for more than 18 months, and
while they will not discuss particulars of the case, it's understood
each new week brings a new ream of paper -- bank statements, receipts
and transaction records -- and a slew of electronic documents.
But while the information rolls in, the RCMP have more to do before they
can consider laying charges.
"We're in a holding pattern, there's nothing we can say at this point,"
said IMET spokesman Brent Mudry. "We are progressing, we're on track and
it's going well. It just takes a while to get the records."
Mudry said in cases like these, one transaction tends to lead to one
account and then another, all of which requires time to request the
records from financial institutions and time for those requests to be
"That can take weeks up to months, because we can't just look for
certain transactions, we have to go for everything," he said.
There doesn't appear to have been much progress on other Thow fronts
According to Andrea Racicot, spokeswoman for a Victoria-based group of
Thow's former clients, there seems to have been a lull in activity
though the group intends to meet again in the next few weeks.
The group is likely to be discussing how to approach Scotiabank, which
they allege didn't follow proper procedures when it issued loans for
questionable investments with Thow that have cost them millions of
dollars and left them at risk of losing their homes.
Scotiabank has maintained it is not responsible as it did not offer any
of the clients financial advice, but only lent them money to invest with
The clients who have loans outstanding with Scotiabank have undertaken a
letter-writing campaign, and one couple has filed a lawsuit against the
bank. The group has considered filing a class action lawsuit or filing
"Right now there just hasn't been as much activity as there had been
before," said Racicot. "I don't know if it's people getting tired or if
we're waiting to see what's going to happen with the RCMP and the [B.C.]
The BCSC has set dates for a hearing -- May 29-31, June 4-6, June 8 and
June 13-22 -- to determine if it is in the public interest to take
action against Thow.
The BCSC's notice of hearing states that from January 2003 to May 2005,
Thow is alleged to have made false representations in telling clients he
was able to invest money for them in various securities. It is further
alleged he used some or all of the clients' money for his personal use.
The notice alleges Thow breached the Securities Act and related rules by
failing to deal fairly, honestly and in good faith with his clients;
trading in non-mutual-fund securities for which he was not registered;
and making misrepresentations in the selling of securities.
It is unlikely Thow will attend the hearings in person.
If he crosses the border into Canada he may be arrested, stemming from a
breach of the Insolvency and Bankruptcy Act: He removed items from his
home after his assets had been frozen and an interim receiver was
appointed. The bankruptcy trustee, Michael Cheevers of Vancouver-based
Wolridge Mahon, filed for an arrest warrant Sept. 19, 2005.
The Mutual Fund Dealers Association, a self-regulatory body that which
oversees dealers like Berkshire, is not investigating Thow but is
actively investigating Berkshire's activities since the summer of 2005
when complaints of Thow's conduct first came to light.
According to Shaun Devlin, vice-president of enforcement for the MFDA,
rather than duplicating proceedings, the MFDA deferred investigation of
Thow to the B.C. Securities Commission and focused on the activities of
If the MFDA's investigation into Berkshire finds wrongdoing, the
enforcement terms can range from having conditions placed on its
registration and fines, to suspension or termination of membership.