July 22, 2006
One year after the scandal unfolded,
the alleged victims of disgraced former financial adviser Ian Thow are
still picking up the pieces of their shattered lives -- battling health
problems, persistent delays and mounting bureaucracy
You could forgive Ron Black if he slumped back in his chair and gave up,
for waving away the annoying questions and just parking himself at home
and shutting himself off from the world.
After all, Black, one of former Berkshire Investments adviser Ian Thow's
clients has lost everything.
The life savings Black and his wife Sheila put away before she died in
2004 is gone, and with it any hope of a comfortable retirement. Black's
$700,000 is part of $32 million Thow's former clients and creditors
claim he owes them after investing in schemes that ranged from a
Jamaican bank to loans for Vancouver developers and seed shares in
The former vice-president of Berkshire Investment Group left the company
at the end of May last year, filed for bankruptcy in Canada and the U.S.
and fled Victoria. He has been living in Seattle since August 2005,
avoiding 73 former clients and unsecured creditors.
There has been some progress in the year since Thow left the Island and
his clients, many of whom considered him part of their family.
Berkshire has settled 15 claims with 26 of the former clients, but that
represents only a small fraction of the $32 million that's missing. The
bulk of it has yet to be dealt with, much of it involved in the Jamaican
bank scheme, and there's no indication any more compensation will happen
According to Berkshire's senior counsel, Julie Clarke, the company's
"investigation has not as yet been completed in respect of the
complainants who alleged they purchased (National Commercial Bank of
Jamaica) shares partly due to lack of documentation."
Clarke said because "these alleged investments were not done through
Berkshire on Berkshire's books and records ... therefore Berkshire is
not itself in possession of all relevant documentation."
She said any further comment would be inappropriate as a number of the
NCB claims are in litigation and she will not comment on matters before
And while the RCMP Integrated Market Enforcement Team has been
investigating for months, no criminal charges have been laid against
Thow and there's no sign of when that could happen.
According to IMET spokesman Const. Cam Miller, the police will not
comment on any investigation that is ongoing and would not speculate on
what was holding up the process.
The B.C. Securities Commission only recently finished its investigation
and is the first agency to have acted. The BCSC this week filed a notice
of hearing that states from January 2003 to May 2005 Thow is alleged to
have made false representations in telling clients he was able to invest
money for them in various securities. It is further alleged he used some
or all of the clients' money for his personal use.
The notice alleges Thow breached the Securities Act and related rules by
failing to deal fairly, honestly and in good faith with his clients,
trading in non-mutual-fund securities for which he was not registered,
and making misrepresentations in the selling of securities.
To some creditors this small gesture, a year after they were gutted by
the news their life savings was gone, is a start. To others it means
"This has destroyed my whole bloody life," said Black. "I can't do
anything, I can't go anywhere, I'm trying to sell my house and trying to
find a different place to live but since my house hasn't sold I don't
know what I can afford."
Black, like many of his fellow creditors, said that kind of news doesn't
mean anything because it does nothing to put money back into their
"When this happened in June of last year I was in shock," Black said. "I
was still dealing with the death of my wife so I was going through all
that at once and realizing I didn't have a bloody cent.
"One of the things I learned from going to hospice (after his wife's
death) is to keep up your sense of humour ... but with this, sometimes
it's very hard."
Black can sometimes still laugh. Like many of Thow's former clients he
refuses to let this beat him.
You can see it during the regular meetings of VOIT, Victims of Ian Thow,
a support group and community that comes together to talk about how this
financial scandal has affected them and what they can do about it.
There are usually about 25 people who turn up for meetings, and the mood
is light and good humoured.
They smile, laugh, share their highlights and lowlights, compare their
scars and talk about their small triumphs.
It's a room of people who are now nearly broke, but they are not broken
-- they may have lost their life savings but they are still full of
"This is not going to beat us," said Andrea Racicot, who along with
husband Gene has lost $375,000. "We're not going to let it. (Thow) and
this situation are not the centre of our attention."
But it has taken its toll. And not just on their bank accounts.
Racicot says she's not sleeping as well as she used to. She worries more
and the stress depletes her of energy.
"It's caused a lot more worry. Any savings or retirement money we had is
gone," she said.
There are members of the group who have had heart trouble, and at least
two have had heart-related surgeries over the last year. Others are
suffering from stress, manifesting itself in skin rashes, irritability
and a variety of other symptoms.
"It's incredibly stressful, you can't help but think about it," said
Barry Hewko who lost $100,000 in the Jamaican bank scheme. "I have a
high blood pressure issue so I had to cut back on work to half days, and
problems with my eye that the doctors thinks may have been a minor
stroke -- it's all just icing on the cake."
Hewko's investment loss may only have been $100,000, but coupled with
$150,000 in legal fees and lawyers bills he had to deal with previously,
it hit hard.
"I'm now 56 and thinking about bankruptcy when I should have been
thinking about retiring," he said, his voice trailing off in
Frustration might be the best term to describe the collective feeling of
the creditor group a year after Thow's deeds started coming to light.
"We've gone from being very happy and comfortable, in retirement with no
debt and a house that's paid for to just having my teacher's pension and
old age security -- that's all we've got," said 86 year- old Irving
Lozier, who lost $350,000 he had invested with Berkshire and now has an
outstanding loan Thow arranged for $225,000 hanging over his head. "It
is so frustrating."
For Gene Racicot, part of the frustration is watching people agonize
over the realization the world doesn't always work as it should.
"It's heart rending to watch people who all their life believed in a
model of how society responds and acts ... and they find themselves in a
situation like this and they realize how it really is and they are
devastated," he said, noting they are all frustrated and perplexed at
the lack of response from banks and investments firms, and a lack of
action from law enforcement.
"I guess the basic point is they wonder 'why isn't the world the way I
thought it should be? Why don't they do the right thing ... why don't
THE IAN THOW AFFAIR
May 2005 -- Thow resigns from Berkshire.
June 2005 -- Goodwin family files suit against Thow, claiming $1.4
million owing due to investment scheme in the National Commercial Bank
of Jamaica -- the first of a series of lawsuits filed for the same
July 2005 -- Court freezes Thow's worldwide assets; he files intention,
under the Bankruptcy and Insolvency Act, to file a proposal to
August 2005 -- Thow files proposal to creditors, to whom he owes $32
million, offering proceeds of the sale of remaining assets --
principally his mansion on West Saanich Road -- and $5 million from a
mysterious benefactor if they accept the proposal.
September 2005 -- Thow files for bankruptcy in the United States; Thow's
creditors meet in Victoria and vote down his proposal and put him into
bankruptcy; an arrest warrant is issued for Thow for violation of
Bankruptcy and Insolvency Act for removing assets from his home.
October 2005 -- Thow has a date to appear in bankruptcy court in
Seattle; when confronted Thow breaks his silence and agrees to speak
with Times Colonist in Seattle, claims to be "living on buttons" and
denies allegations he sold shares in Jamaican bank
November 2005 -- Berkshire founder Michael Lee-Chin comes to Victoria
and is confronted by Thow's former clients at Laurel Point Inn, he
agrees to meet with them and soon starts an internal investigation into
January 2006 -- Berkshire Investment Group offers mediation as a means
of settling a slew of disputes with some of Thow's former clients.
Berkshire hires former B.C. attorney general Geoff Plant as mediator.
March April 2006 -- Mediation continues and by mid-April 15 agreements
are reached involving 26 clients.
July 2006 -- Thow is charged with domestic violence assault in Seattle.
He enters into a plea agreement meaning he will have to undergo drug and
alcohol counselling, domestic-violence counselling and comply with a
no-contact order; he is on probation for two years.
July 2006 -- The B.C. Securities Commission completes its investigation
into Thow and sets Aug. 30 as the date for a meeting to determine a
hearing date into allegations Thow made false representations in telling
clients he was able to invest money for them in various securities. It
is further alleged he used some or all of the clients' money for his
personal use. The notice of hearing alleges Thow breached the Securities
Act and related rules by failing to deal fairly, honestly and in good
faith with his clients, trading in non-mutual-fund securities for which
he was not registered, and making misrepresentations in the selling of