Investors Scrutinizing the Regulators

Home Page

InvestorVoice.CA


Securities Regulation In CanadA


Fox Guarding the Hen House

   

Ex-Berkshire salesman 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 2005.

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.
 

see: 

Ian Thow takes flight