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
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
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
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
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