Ex-clients reveal what they lost to rogue broker
Elderly sisters tell panel how Ian Thow cost them thousands

 

Thursday, May 31, 2007

BY DAVID BAINES
COLUMNIST

The parade of walking wounded resumed Wednesday as more former clients of rogue broker Ian Thow told a B. C. Securities Commission hearing panel how he stripped their retirement savings and left them swimming in debt.

Shirley Garwood and Helena Kells, elderly sisters who live in North Saanich, told the hearing that Thow, formerly senior vicepresident of Berkshire Securities in Victoria, persuaded them to buy mutual funds.

The sisters said they were impressed that Thow belonged to service clubs and community programs such as CrimeStoppers, donated money to charities, and was frequently mentioned in the local Victoria newspaper.

“ He seemed like the man of the hour,” Garwood told commission enforcement counsel Doug MacKay.

However, the mutual funds did not perform well: “ He came to us and said, ‘ I feel badly you lost so much money. I can help you,’ ” Garwood recalled.

Thow urged them to invest in what he described as short- term mortgage loans to real estate developers.

The developers would pay high rates of interest and bonuses, and he assured them it would be a low- risk investment.

The sisters described how they gave Thow $ 415,000 in cheques, payable to him or his private numbered company, during 2004.

They said they never got a receipt or any written acknowledgement of their investment.

To finance the investment, Thow advised them to redeem their mutual funds and RRSPs. He also helped them arrange a line of credit, secured by their house, at the Bank of Nova Scotia.

In ensuing weeks and months, Thow assured them the investment was working: “ Ian came to us and said we were making so much money. He loved us ... ‘ You are my favorite ladies’ ... kiss, kiss, hug, hug,” Garwood said.

The sisters said they did not recover any of the money, other than $ 30,000 that they pressed Thow to give them to pay income taxes triggered by their RRSP withdrawal, and $ 10,000 for living expenses.

Asked how much they lost in total, Garwood said, “ It’s a lot of money. . . . We ended up with a loan at the Bank of Nova Scotia for $ 465,000, which all went to Ian.”

Asked how the loss has affected them, Garwood said it has caused health problems ( her sister had a heart attack that Garwood attributes to stress), they no longer travel, and they have to defer repairs on their house. “ Our life has changed totally,” she said.

In a later interview, the sisters said Berkshire has compensated them for some of their loss, but declined to say how much because of a confidentiality clause.

They said they still have a large mortgage on their home.

Another witness, Richard Lorette of Sidney, told the panel he worked as a pilot for Thow and then became a client. Like the other witnesses, he said he initially invested in mutual funds.

In September 2004, Thow suddenly recommended a new strategy. He said Berkshire was going public and Lorette could purchase shares of the initial public offering.

Lorette said he wrote two cheques for a total of $ 120,000, one payable to Thow and the other to Thow’s private company. For “ security,” Thow gave Lorette a cheque for $120,000 drawn on his company account at the Bank of Nova Scotia, which Lorette could presumably cash at any time.

Lorette said he never did get any shares. When he inquired, Thow told him Berkshire was having trouble getting approval for its IPO from certain provinces. ( In fact, Berkshire never had any plans to go public.)

In May 2005, Lorette tried to cash the cheque, but the bank told him the account no longer existed. He said he lost every cent, and Berkshire has refused to compensate him for any of his losses.

Commission enforcement staff are alleging that Thow duped investors out of up to $ 30 million in a variety of bogus investment schemes. RCMP are also conducting a criminal investigation. Thow is now living in Seattle and is not attending the hearing.

dbaines@png.canwest.com

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Ian Thow takes flight