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Accountant unravels Thow's money trail
Clients' money used to finance lavish lifestyle, pay debts, hearing told

Andrew A. Duffy

Friday, June 08, 2007

Ian Thow

VANCOUVER -- How Ian Thow managed to keep his records straight is a thing of wonder.

The disgraced former vice-president of Berkshire Investment Group had a mind-boggling 63 bank accounts, lines of credit and credit cards under his control -- and those are just the ones the B.C. Securities Commission knows about.

This week the commission, which is in the midst of a hearing into Thow's activities, brought in a forensic accountant to testify about what Thow did with his clients' money.

For many of Thow's former clients, like Brad Goodwin, who has been attending the hearing, accountant James Blatchford merely confirmed what they had suspected all along -- that Thow took their money and spent it on a lifestyle that included expensive cars, boats, airplanes and an ostentatious waterfront home in Victoria.

The 1,500-page report Blatchford prepared for the commission after looking over Thow's accounts cites reams of examples of clients handing over money to Thow, only to have it funnelled to personal accounts, credit cards, car dealers and even to pay off other clients.

"He purposely used the proceeds he received from investor clients in an effort to support personal, family and corporate financial obligations," Blatchford told the BCSC panel.

Commission counsel Doug MacKay asked Blatchford to go through only a few examples of these kinds of transactions during his appearance on Wednesday.

But there are 19 separate schematic charts in the massive report showing how the money was used.

Though they don't go into great detail -- there are a number of cash withdrawals made by Thow that are not traced beyond the withdrawal transaction -- they paint a picture of a man borrowing from Peter to pay Paul while enjoying a lavish lifestyle.

One of those charts shows Thrifty Foods founder Alex Campbell, who claims he lost $12 million through investing with Thow, and Nanaimo car dealer Tom Harris, who has lost $820,000, giving $200,000 each through Thow's numbered company 657594 B.C. Ltd. That money was then withdrawn by Thow in four separate transactions totalling $332,000. Another $22,526 was paid to one of his Visa accounts.

One chart shows that same numbered company taking in $750,000 from Nakamura Farms. Thow used that money to pay an $86,000 bill at West Coast Fishing as well as paying $20,000 towards his Visa balance, an $11,000 Visa bill for his second wife, Alyssa, and sending $200,000 to Harris, among other transactions.

On another chart, Blatchford shows Thow paying clients Kirk Wong $7,458 and Don Goodwin $100,000 out of a $175,000 cheque he received from Harris.

Yet another chart shows $549,000 from the Goodwin family, who claim they are owed $1.4 million, going to Thow, only to be turned into a $500,000 payment to GE Capital as partial payment for an aircraft, with another $3,200 being paid out to either Thow or his first wife, Teresa.

Clients who got a taste of what was happening to their money during Blatchford's testimony reacted with disgust, though they admit it didn't come as a surprise.

Thow's former clients and creditors claim he owes them in excess of $32 million. He settled in Seattle after his bankruptcy in 2005.

The former clients claim he cost them millions by having them invest in a series of schemes that included buying shares in the National Commercial Bank of Jamaica (JNCB), an initial public offering for Berkshire and providing short-term loans to developers.

The money went to Thow, but as Blatchford pointed out in his report, none of it appears to have made it anywhere close to these investment schemes.

There is no mention of Berkshire or any of these kinds of investments on any of the 19 money-flow charts included in the report.

"In my opinion, Mr. Thow did not manage or control funds received from investor clients in a manner consistent with the expectations of the investor clients," Blatchford told the panel. "He transferred or otherwise depleted investor client funds contrary to their desire [to purchase] shares in the JNCB or the mortgage development [scheme]."

Because of the time and cost of tracing the money Thow is alleged to have bilked from investors, the commission had Blatchford trace just $6 million of it.

The hearing has been adjourned until June 14 and 15, when MacKay expects to call more clients to testify.



Ian Thow takes flight