Andrew A. Duffy
Friday, December 21, 2007
Ian Thow, who defrauded clients out of millions of dollars while he was
working as an investment adviser in Victoria, has been nailed with the
largest fine in B.C. Securities Commission history.
The former Berkshire Investment Group vice president was fined $6
million and banned for life from the province's capital markets.
But the Securities Commission acknowledges it may never collect the
Thow, who appears to be living in Seattle, has filed for bankruptcy.
He did not return calls yesterday, but told the Times Colonist in a
recent interview that he considered the Securities Commission
proceedings to be a kangaroo court where he could not defend
himself, and that there was still another story to be told about the
"If he is broke, this will make sure he stays broke," said Lang
Evans, the commission's director of enforcement. The commission
"won't take a nickel before investors are paid out," he said.
Ian Thow committed "one of the most callous and audacious frauds
this province has seen," securities commission said.
"But if we do find something, we have been aggressive in the past by
placing liens on property and moving to foreclosure against residences."
The commission is limited in what it can do in other countries, he said.
"We will petition our colleagues in other jurisdictions to reciprocate
the lifetime ban."
Changes to securities law in B.C. cleared the way for the $6 million
"Recent legislative changes have raised the bar as far as administrative
penalties are concerned, and on the monetary side this is an absolute
crystal clear statement by the commission that this conduct is
completely unacceptable," Evans said in an interview. "These are the
strongest sanctions we can levy."
Before legislative changes, which came into effect in 2006 and 2007, the
maximum administrative penalty was $250,000 which Thow was expected to
have been fined given his contraventions of the Securities Act took
place in 2005.
Thow's former clients and creditors claim he bilked them out of more
than $32 million by convincing them to invest in schemes that ranged
from a Jamaican bank to loans for Vancouver developers and seed shares
with his former employer.
A Securities Commission hearing this fall traced $6 million of those
losses, and found Thow never made those investments and instead used the
money to pay for his lavish lifestyle.
The commission concluded then that Thow's actions represented "one of
the most callous and audacious frauds this province has seen."
"Thow significantly harmed investors and damaged the integrity of
British Columbia's capital markets," the commission's panel wrote in its
decision on the sanctions. "Thow's conduct shows he is not fit to
participate in our capital markets. We must also make orders that will
demonstrate the consequences of his conduct, and that will have an
appropriate deterrent effect."
Evans said the $6 million figure was deemed appropriate as that was the
amount of losses the commission presented to the hearing panel.
Brad Goodwin, whose family says it lost $1.4 million to Thow, said the
decision on sanctions was an early Christmas present. "It is a morale
boost, it's uplifting," he said. "They made it happen, they threw the
book at him."
Goodwin said while he knows the fine is never likely to be collected,
the amount will make a difference as a deterrent to others who try to
take advantage of investors.
"This will improve the whole investment climate in B.C. when fraudsters
see this kind of stuff," he said. "It really sends a message."
Earlier this month the Mutual Fund Dealers Association and Berkshire
reached a settlement over the Thow affair that will see his former
company pay a $500,000 fine and $50,000 in costs because they failed to
take reasonable supervisory and disciplinary measures to deal with
complaints about Thow.
The RCMP has investigated Thow and passed on the file to Crown
prosecutors to consider charges.
"We fully support the pursuit of charges, quite frankly that simply has
to be part of the equation," said Evans. "When we have criminal charges
we can invoke extradition processes and get him out of Seattle, back in
the province and into criminal court where he belongs."