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Ian Thow fined $6 million for securities fraud
Banned for life from B.C. capital markets; creditors would get money before fine is collected; uncertainty about what Thow has for assets


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 fine.

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 saga.

"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 fine.

"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."

aduffy@tc.canwest.com

see: 

Ian Thow takes flight