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Thow must talk, U.S. court rules

Andrew A. Duffy

Tuesday, June 19, 2007

A Seattle court has ruled disgraced Berkshire investment adviser Ian Thow must provide answers to the Canadian trustee handling his high-profile bankruptcy.

Late last week trustee Michael Cheevers learned the court ruled Thow must answer the 13 questions he has asked of Thow's sources of income, places of residence and employment information.

The examination is part of the trustee's search for more than $32 million former clients and creditors claim they are owed by Thow, who left the country in the summer of 2005 after declaring bankruptcy.

"I don't have a final court order yet, but as far as I understand it the court has required Mr. Thow to answer our questions," said Cheevers, noting Thow has until June 29 to hand them over.

The answers to those questions may also shed some light on why two former Thow clients have been sending him money.

Two of the questions posed to Thow ask him to describe his relationship with Nanaimo car dealer Tom Harris and Alberta farmer Kevin Prins, and to detail the amount of funds he has received from them and what goods, services or consideration, if any, he provided in return for that money.

Cheevers has said he has bank statements proving the men provided funds to Thow.

Reached for comment Monday, Harris would say only, "I don't think it's a concern," and would not discuss anything about Thow on the record.

But while Harris wouldn't talk about it, the matter did come up during one of the regular meetings of the support group made up of Thow's victims.

Some of those former clients have expressed their frustration and disappointment that Thow is still being funded, while others are holding off judgment until they understand the reasons why.

According to one of the former clients, Monday's meeting was mainly about updating the group about developments in the two-year-old saga, including the three-week B.C. Securities Commission hearing into Thow which wrapped up June 14.

The BCSC is now awaiting the prosecuting counsel's written argument due June 29, with an oral submission expected July 6.

"But mostly our meetings are about sticking together," said former client Ron Black. "That's how we were able to get anything [out of Berkshire as a settlement] in the first place, and it's the only way we'll be able to get anything going forward, though there are no guarantees."

Berkshire agreed to 16 settlements involving 27 of Thow's former clients. Terms have not been disclosed.

Some of those clients are also dealing with Scotiabank. They allege the bank didn't follow proper procedures when it issued loans for questionable investments that cost them millions of dollars and left them at risk of losing their homes.

Scotiabank's role in the Thow affair seems to have been providing loans and lines of credit totalling about $5 million to as many as 15 of Thow's clients.

That matter is before the ombudsman.

Cheevers at this point is waiting to see if Thow's answers will shed any light on where the money went.

Cheevers' investigation traced more than $26 million moving from the accounts of clients into Thow's own accounts in the 30 months before he declared bankruptcy.

When asked if some of that money met the same fate as the $6 million traced by the forensic accountant who testified at the BCSC hearings that Thow used his clients' money to fuel his own lifestyle, Cheevers said: "I think that's a fair assessment."



Ian Thow takes flight