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BCSC finds Thow perpetrated ‘one of the worst fraud's' in B.C. history


JANET MCFARLAND
October 17, 2007

 

Former mutual fund salesman Ian Thow is guilty of perpetrating one of the worst frauds in British Columbia's history, a B.C. Securities Commission panel has ruled.

“This case represents one of the most callous and audacious frauds this province has seen,” the panel said in a ruling released Wednesday. “Thow preyed on his clients by offering them non-existent securities and instead using the funds to support his lavish lifestyle. He took their money and betrayed their trust. He has left a trail of financial devastation and heartbreak.”

Mr. Thow, who was a senior vice-president at Berkshire Investment Group Inc. in Victoria, was accused of taking approximately $30-million from clients between January, 2003, and May, 2005. He convinced them to invest primarily in construction loans and shares of a Jamaican bank, advising them to sell their mutual funds, mortgage their homes and take out bank loans to raise the money.

The BCSC found that neither the construction loans nor the shares existed, and the clients lost most or all of their money.

Mr. Thow did not attend the BCSC hearing and was not represented by counsel.

The BCSC said Mr. Thow, 46, used most of the money he raised to buy personal items, including a $1.5-million Sea Ray yacht and a fleet of aircraft, including a helicopter and two personal jets. He lived in a $4.6-million mansion in Victoria and drove a fleet of cars, including a Hummer, a Porsche Boxster, two Mercedes-Benzes and a Cadillac.

Mr. Thow fled to the United States in 2005 and now reportedly lives in Seattle and works as a mortgage broker.

Before his schemes collapsed, however, he was a prominent member of Victoria society and was well-known for pledging large donations to local charities. Most of the charities received little of the money they were promised.

The BCSC said Mr. Thow had hundreds of clients, but the commission considered evidence involving only 26 of them who lost a total of $8.7-million.

Mr. Thow befriended his clients and won their trust, the BCSC said. Many of them were senior citizens who had suffered losses on their mutual funds. Mr. Thow offered them a way to recoup their funds by investing in fabricated construction loans, promising returns ranging from 32 per cent to 192 per cent.

Among his tactics, Mr. Thow trumpeted his allegedly close friendship with AIC Ltd. founder Michael Lee-Chin, who controlled Berkshire prior to its sale to Manulife Financial Corp. this year. Mr. Thow promoted an investment in National Commercial Bank of Jamaica Ltd., which was also controlled by Mr. Lee-Chin. He also offered clients an opportunity to invest in an initial public offering of shares by Berkshire – which, in fact, never had any plans to go public.

Berkshire later ran full-page newspaper ads stating Mr. Thow had no business relationship with Mr. Lee-Chin and was not authorized to sell shares in the Jamaican bank.

The BCSC accused Mr. Thow of fraud, making misrepresentations, trading in securities without being registered, and failing to deal fairly and honestly with clients.

The BCSC panel said Mr. Thow's breach of that final requirement “was as blatant a contravention of these rules as one could imagine: he dealt unfairly, dishonestly, and in bad faith with his clients.”

The commission has not ruled yet on the sanctions it will impose on Mr. Thow, saying it will hear submissions before deciding on penalties.
 

see: 

Ian Thow takes flight