Andrew A. Duffy
Thursday, June 07, 2007
VANCOUVER -- The money disgraced investment adviser Ian Thow accepted
from some clients went to pay down his personal Visa bills, eliminate
overdrafts from his personal accounts and pay off loans, a forensic
accountant testified yesterday.
It went to car dealerships, into his pocket as cash and was used to pay
It seemed to go everywhere but toward purchasing the investments his
clients had been promised, veteran forensic accountant James Blatchford
told the B.C. Securities Commission hearings into Thow's conduct.
As has been the case throughout the hearing, the former vice-president
of Berkshire Investment Group was neither present nor provided defence
counsel to act on his behalf.
Thow has been living in Seattle since 2005 after fleeing Victoria and
his high-profile bankruptcy that left 73 former clients and unsecured
creditors claiming he owed them in excess of $32 million.
The former clients claim he cost them millions by having them put money
into in a series of investment schemes, though it's becoming clear Thow
used that money to fuel his own lavish lifestyle.
During two hours of testimony, Blatchford, a certified management
accountant and forensic accountant with Grant Thornton LLP, dealt with
Thow getting money from his clients and how he would quickly disperse
the funds into other accounts he controlled and then into a variety of
expenditures such as Visa bills and overdrafts.
"It's just like being kicked in the guts, like someone sucker-punched
you," said former Thow client Brad Goodwin, one of the few former
clients who showed up for the fourth day of hearings.
"Just to see [the money] spent like that makes me sick, sick that a
human being can do that.
"And what really blew me away is that [all of Thow's accounts] were in
overdraft, he was constantly in overdraft, this guy wasn't flush from
Blatchford took the three-member commission panel through sections of
the 1,500-page report he prepared on Thow's accounts.
He showed them how at one point Thow took a cheque for $300,000 from one
of his clients, Darrell Goodwin, and transferred the funds to his other
The immediate expenditures included $100,000 to Vancouver Island Jet to
reduce a deficit, $28,900 to one of his personal accounts to reduce the
balance of a loan, another $29,000 to eliminate a deficit in another
account, $22,577 to Three-Point Motors for his 2003 Mercedes 500SL, and
he took $15,000 in cash.
In another series of charts, he showed money coming in from a number of
former clients and being used to pay down his Visa bills, and
outstanding balances owed to Tom Harris Chev-Olds, among others.
"He deposited the proceeds received from investor/clients to personal,
family or corporate bank accounts that he controlled or managed, and
then made transfers to other personal, family or corporate accounts,"
said Blatchford, reading his report's observations to the hearing. "In
many cases, the number and value of the cheques were more consistent
with personal, family or corporate [transactions] than the purchase of
shares in [the National Commercial Bank of Jamaica] or
There was no mention anywhere of money being transferred to Berkshire
Investment Group or being used to buy into any of the investment schemes
Thow had convinced his clients to take part in.
"None of it ever came through Berkshire," said Julie Clarke, senior
counsel for the investment firm. "And certainly that's been our
difficulty in terms of investigating this. Nothing came through and
we're depending on people coming forward."
In summing up his findings, Blatchford said Thow "purposely used the
proceeds he received from investor clients in an effort to support
personal, family and corporate financial obligations."
He pointed out that in many cases the funds deposited into Thow's
account and quickly dispersed, were often circulated back to that
original account, and were sometimes depleted "by making payments to
other investor clients."
In total, Blatchford said, he looked at about $6 million of the money
given to Thow by his former clients. He said he was able to trace 99 per
cent of it.
The hearing has adjourned until June 14 and 15, when commission counsel
Doug MacKay intends to put more client witnesses on the stand.
MacKay's written argument is to be submitted to the panel by June 29,
but he couldn't say how long it would take for the panel to render its
The BCSC is seeking the maximum penalty enforceable, a lifetime ban from
selling securities in B.C. and a $250,000 administrative penalty, the
maximum allowed when the infractions took place.