Wednesday, October 17, 2007
By IE Staff
A British Columbia Securities Commission panel has found that Ian
Gregory Thow, a former mutual fund salesperson with Berkshire Investment
Group Inc., perpetrated a multi-million dollar fraud between January
2003 and May 2005 when he took money his clients gave him to invest and
instead spent it on himself.
The commission 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 had hundreds of clients. The panel considered the evidence of 26 of
them -- 24 from B.C. and two from Alberta. Thow convinced the 26 clients
to invest $8.7 million primarily in construction loans and shares of a
Jamaican bank, advising some to sell their mutual funds and to mortgage
their homes to raise the money to do so. The panel found that neither
the construction loans nor the shares existed. The clients lost most or
all of their money -- $6 million in total.
Thow used the clients’ money to buy personal items, including luxury
cars, a yacht, and a personal business jet. He also paid off business
loans, and paid other business expenses.
“This case represents one of the most callous and audacious frauds this
province has seen,” the panel said. “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.”
The panel found that Thow befriended his clients and built trust with
them through his high-profile support of charitable and community
causes, his show of wealth, and his apparent close relationship with
Michael Lee Chin, the principal of Berkshire. Thow helped clients borrow
money to make the investments through his relationships with loan
officers at Scotiabank and the Bank of Montreal.
Thow offered the construction loans to clients whose mutual funds had
fallen in value in response to market conditions. He presented the loans
as a way for the clients to recoup their losses. Thow told the clients
they could expect returns ranging from 32% to 192% and that the
investments were safe because they were secured by mortgages. The panel
found no evidence that the loans existed.
Thow offered clients shares in National Commercial Bank Jamaica Limited.
He promoted the investment as “a very good investment” because, he said,
Michael Lee Chin was a controlling shareholder of the bank and was
actively promoting its business. The investment “was going nowhere but
up,” he told clients. The preferred shares did not exist.
Thow offered one client shares in an upcoming initial public offering by
Berkshire. Berkshire had no plans for an IPO.
The panel found that as a result of investing with Thow, retired couple
clients lost their retirement funds, and other clients find themselves
in financial difficulty. Clients continue to suffer stress, anxiety,
depression and other health problems.
The panel said Thow’s contravention of rules requiring him to deal with
his clients fairly, honestly and in good faith “was as blatant a
contravention of these rules as one could imagine,” finding that Thow
dealt “unfairly, dishonestly, and in bad faith with his clients.”
The panel directed the parties to make submissions on sanctions
according to the schedule set out in the findings. IE