Investors Scrutinizing the Regulators

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Fox Guarding the Hen House

   
Investors describe dealings with Thow
Plaintiffs meet with securities regulator for first time


Barry Critchley

Tuesday, July 5, 2005

The activities of Ian Thow, the former senior vice-president at the Victoria office of Berkshire Investment Group whose outside business activities have become the subject of a company investigation, are now front and centre at the B.C. Securities Commission.

Yesterday representatives of the Goodwin family, a group that has filed a statement of claim against Thow demanding the repayment of more than $1-million, met, for the first time, with staff at the provincial securities regulator.

The idea was straightforward: The Goodwins wanted to make a full disclosure of their dealings with Thow to the regulators and bring them up-to-date on a matter that may end up costing investors at least $30-million. Prior to this meeting, the regulator acknowledged it was aware of issues and concerns surrounding Mr. Thow and was looking into them.

The Goodwin group -- a family-run development company (parents Don and Anna, children Daryl and Bradley, plus Gina, a daughter in-law) invested $2.5-million with Thow.

That investment was made into Thow's holding company -- AYG Investments Inc. -- and was earmarked for National Commercial Bank of Jamaica, a bank controlled by Michael Lee-Chin, the founder and largest shareholder of AIC Ltd., and the founder and largest shareholder of Berkshire.

"Thow advised the plaintiffs to invest in shares in the National Commercial Bank.... Thow advised them that this was a limited opportunity only available to clients of Berkshire.... In order to participate in the investment, Thow advised that the funds must be transferred to him personally or to his holding company and he would purchase the shares to be held in trust on behalf of the plaintiffs," read the statement of claim.

So after investing $2.5-million, the family has received $1.446-million in return. The plaintiffs are still owed $1.052-million plus accrued profits.

The Goodwins are one of five different investors who have sued Thow (and/or his holding companies) and Berkshire. Of the others, three are from British Columbia and two are from Alberta.

What does Berkshire say?

Not much, other than the following: "We aren't going to comment on matters that are before the court. During the course of our investigation of his outside business activities, Mr. Thow resigned."



The legal redress sought by the Goodwin family would not have been necessary had Thow followed through on a settlement allegedly reached with the Goodwins last month.

Back then the Goodwin clan -- together with Derek Stimson, a businessman based in Coaldale, Alta., who has also filed a claim against Thow, Berkshire and 657594 B.C. Ltd., one of Thow's holding companies -- were on their way to Berkshire's head office in Burlington, Ont. Their mission: to meet with Berkshire's compliance department.

"When the plane landed, the cellphones started ringing," Brad Goodwin said. "It was Thow's lawyer. He was trying to negotiate a deal with us to stop us from going to the Burlington office and telling them about Ian Thow."

The outcome of those phone conversations was that Thow and Stimson reached an agreement, as did Thow and the Goodwins. As a result, the meeting was cancelled. As part of that agreement, Thow would return the money within six months.

"We came home. All we had to do was sign the papers. But Ian Thow pulled the agreement. I didn't think that was possible once the money was in trust," Goodwin said.

Rod Anderson, a lawyer with the Vancouver law firm of Harper Grey Easton, has been retained by Thow. Yesterday he wouldn't comment on any of the allegations made by the Goodwins.

"I have no instructions from my client to make comments to the press concerning these matters because they are before the courts," he said, adding that he would not comment on whether he acted for Thow on the settlements with Stimson and the Goodwins. And he would not comment on Thow's whereabouts.

He did say that "we are going to defend the claims."
 



Aside from a group of former clients who claim they are owed money from Thow and/or his holding company and/or Berkshire, Thow has other pressing legal matters. Recently, Donald James, a former partner of Thow -- the two were purchasing an aircraft -- initiated a court action against Thow. (In turn, Thow sued James and James counterclaimed.) Last week, James was successful in winning an injunction that restrains Thow and his company from "encumbering, charging, mortgaging, disposing or in any way dealing with" the aircraft. The injunction also required that the aircraft be delivered to the aircraft operator. James is now proceeding with an arbitration of his claims.
 

see: 

Ian Thow takes flight