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Thow paperwork piling up
RCMP investigators are in a holding pattern while gathering data

 

Andrew A.Duffy

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 fled Victoria.

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 processed.

"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 either.

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 Thow.

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 individual suits.

"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.] Securities Commission."

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 the dealer.

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.

aduffy@tc.canwest.com

see: 

 

Ian Thow takes flight