Thow cited in 'callous and audacious' fraud: $30M gone?
October 17, 2007
VANCOUVER - Ian Gregory Thow, a former mutual fund salesperson with
Berkshire Investment Group, perpetrated "one of the most callous and
audacious frauds this province has seen" and cost clients at least $6
million and as much as $30 million, the British Columbia Securities
Commission said Wednesday.
A BCSC panel found that Thow "perpetrated a fraud, made
misrepresentations, traded in securities without being registered, and
failed to deal fairly, honestly and in good faith with his clients when
he took millions of dollars from his clients to invest in securities
that did not exist."
Thow, 46, now is believed to be in the Seattle area after entering the
United States in 2005.
He had hundreds of clients and BCSC staff alleged he misappropriated as
much as $30 million, but the panel took evidence from 26 who entrusted
him with $8.7 million between January 2003 and May 2005.
Some sold mutual funds and mortgaged their homes to invest in what were
purported to be construction loans and shares of a Jamaican bank.
The BCSC found that neither the loans nor the bank stock existed, and
the 26 clients lost $6 million in total, with 10 of them losing every
penny they invested.
Thow used their money to buy luxury cars, a yacht and a personal jet, as
well as to pay off business loans and cover other expenses.
"He took their money and betrayed their trust," the commission said.
"He has left a trail of financial devastation and heartbreak."
The panel said Thow befriended unsophisticated clients and built trust
through his publicized support of charities, his display of wealth, and
his apparent close relationship with Michael Lee-Chin, head of the AIC
Inc. mutual fund organization and principal of the Berkshire advisory
group, which was sold last summer to Manulife Financial Corp. (TSX:MFC).
Thow offered the construction-loan investments to clients whose mutual
funds had fallen in value, presenting them as a secure way to recoup
their losses and predicting annualized returns of up to 192 per cent.
He also sold non-existent preferred shares in National Commercial Bank
Jamaica, which he said was a solid investment because Lee-Chin was a
controlling shareholder. Some investors were flattered by being invited
to travel on the jet to meet and have pictures taken with Lee-Chin.
The BCSC panel now is open to submissions on sanctions.
Thow, who was registered only to sell mutual funds, started with
Investors Group and moved in 1998 to Berkshire, which fired him in June
He told clients he earned $6 million a year, and as one client
testified: "We thought he was a paragon of virtue . . . he was running
Crime Stoppers and he was always donating to these various charities,
and he just seemed, like, you know, the man of the hour."
Among the clients he "preyed on," the BCSC said a retired couple with a
paid-for home and no debt gave Thow $349,000 after raising $159,000 by
selling mutual funds and $125,000 by mortgaging their home. They now are
living on their pensions, much of which go to mortgage payments.
In another case, two retired sisters gave Thow $455,000, selling mutual
funds to raise $130,000 and borrowing much of the rest through a loan
officer with a Victoria branch of Scotiabank (TSX:BNS). They now owe the
bank over $400,000 and one has had a heart attack blamed on stress
caused by the financial reverse.
Clients testified that Thow showed off a large waterfront home, aircraft
including a Cessna 182 light plane, a Bell 206 helicopter, a Cessna
Citation X jet and a Cessna Bravo personal jet; a fleet of cars
including two Mercedes-Benzes, a Cadillac Escalade, a Corvette and a
Porsche Boxster; and a ski boat, a Boston Whaler and a 56-foot yacht.