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Thow court probe 'will be continued'
Ex-financial adviser's bankruptcy trustee says examination isn't over but he can't talk about it

Andrew A. Duffy

Wednesday, October 31, 2007

SEATTLE -- The trustee overseeing Ian Thow's bankruptcy said examination of the disgraced former Berkshire investment adviser's current financial and personal affairs will be continued at a later date.

Michael Cheevers, who started to carry out an examination of Thow's sources of income, places of residence and assets at a U.S. Bankruptcy Court in Seattle on Monday, was unable to say very much about the answers Thow was giving or the general mood of discussion, but he did say it wasn't over.

"It will continue, let's put it that way," said Cheevers, who said the proceedings had been adjourned late Monday afternoon and will continue at another date.

But beyond that he would not talk about what occured at the hearing.

"I really can't talk about [Monday] given the judge's comments," said Cheevers. "There's obviously a lot of interest out there, but having had the rules laid down it would be wrong to talk about it, otherwise we can't get after [Thow] for not playing by [the rules]."

Judge Philip Brandt ruled the media would not be allowed to attend the examination or report on the outcome.

Following a brief hearing, Brandt said his instinct was the examination process would not be prejudiced if it was done in private. Both legal counsel for Cheevers and Thow argued to have the proceedings closed in order to maintain the integrity of the examination, ensure the process was efficient and to protect Thow's personal banking information.

"Our concern is we want to get as full and frank answers as we can," said Cheevers, of Vancouver-based Wolridge Mahon.

The Times Colonist and CHEK News have hired Seattle-based legal representation to apply for access to a transcript of the examination.

According to counsel Sarah Duran, of Davis Wright Tremaine LLP, the motion was to be filed no later than today, but it was not clear when Brandt would be able to hear the motion and when a ruling could be expected.

Thow's bankruptcy counsel, Larry Feinstein, said he will request the ability to black out certain information from the transcript -- such as personal banking information and credit card numbers -- should the media gain access to it.

Duran said her firm would be pushing to have the full transcript made available.

However, should Brandt rule either party is able to black out parts of the transcript, Duran said they would be asking for a timeline to be imposed on the parties in order to make the transcript available as soon as possible.

Cheevers said it was likely any alterations made to the transcript at this point would come from Thow's lawyer under the auspices of protecting personal information.

But Thow, who fled Canada to Seattle in the summer of 2005 amid allegations he defrauded investors of $32 million and used the funds to fuel his lavish lifestyle, is facing more than just another grilling from Cheevers.

Thow is also facing criminal proceedings as the provincial Crown counsel is now in possession of the RCMP Integrated Market Enforcement Team's investigation and is in the process of completing a charge assessment.

Thow was also reprimanded harshly earlier this month by the B.C. Securities Commission, which characterized his actions as one of the most callous and audacious frauds in B.C. history, ruling Thow perpetrated a multimillion-dollar fraud when he took money his clients gave him to invest and instead spent it on a luxurious lifestyle.

The BCSC is expected to hand down sanctions of a $250,000 fine and lifetime trading ban in November.

A Mutual Fund Dealers Association of Canada hearing panel, also held this month, flatly rejected a proposed settlement by Berkshire.

No details of the proposal were made public.

It was the first time the mutual fund dealers have ever rejected a settlement. It means the self-regulating body is free to re-open its investigation into Berkshire, try to come up with a new settlement or proceed with a contested public hearing into allegations Berkshire failed to conduct reasonable supervisory investigations of Thow's activities and to take reasonable supervisory and disciplinary measures as required.


Ian Thow takes flight