July 29, 2006
Former clients of disgraced investment
adviser Ian Thow appear to be gearing up for a fight with the Bank of
Nova Scotia, reminiscent of the early stages of their battle against
Thow's former investment firm.
And like the early stages of the fight against Berkshire Investment
Group, those clients who claim to have lost in excess of $32 million by
investing in schemes Thow proffered are finding no sympathy in the halls
Scotiabank spokesman Frank Switzer told the Times Colonist the bank
hasn't changed its position despite the number of clients coming
forward, saying that Scotiabank did not offer any of the people involved
financial advice, but only lent them money to invest with Thow.
In a letter to one of the affected clients obtained by the Times
Colonist, Charlie Dougall, director of the office of Scotiabank's
president, said the bank denies any wrongdoing.
"Our investigation reveals that following your request for credit from
Scotiabank ... this line of credit was granted to you in good faith by
Scotiabank ... although we regret any losses you have incurred in
connection with investments made through Ian Thow of Berkshire
Investments we believe that the appropriate avenues of recourse for you
to pursue are Berkshire and Ian Thow," Dougall wrote.
The letter went on to say that "the working relationship between Mr.
Thow and Scotiabank is standard practice for business professionals such
as investment advisers to have informal referral relationships with a
financial institution which streamlines the process for all involved.
Further your dealings with Scotiabank were such that we were entitled to
rely upon the representations that Mr. Thow was authorized to act as
The letter writing campaign and the lack of response from Scotiabank has
become frustrating for many of Thow's former clients who know they are
in for a long, hard fight.
"Everything is like that with Scotiabank. They deny any wrongdoing,"
said former Thow client Paul Haley, who claims to have lost $475,000.
"We have no expectation they will move quickly. Right now it's just like
the start with Berkshire."
Thow left Victoria in August 2005 with more than 70 creditors claiming
he owed them millions. The former vice-president of Berkshire Investment
Group has been living in Seattle since August 2005.
In their first battle, clients filed lawsuits against Thow and Berkshire
and stoked media pressure until Berkshire Investment Group agreed to
meet with them.
After nearly a year, 15 settlements were reached through mediation with
26 clients for an undisclosed amount.
Now they have turned their attention to Scotiabank, alleging the bank
didn't follow proper procedures when it issued loans for questionable
investments that cost them millions of dollars and left them at risk of
losing their homes.
Scotiabank's role in the Thow affair seems to have been providing loans
and lines of credit totalling about $5 million to as many as 15 of
So far those clients have undertaken a letter writing campaign trying to
get answers from Scotiabank's president and ombudsman, without any
In some cases, the clients allege they had little or no contact with the
bank, and received their loan approvals directly through Thow. Many of
them point out they were poor credit risks or had no income to pay back
Scotiabank was targeted last year by one lawsuit from a former Thow
client, but could now face as many as 15 lawsuits. The client group has
been talking about either filing individual lawsuits or a group action.
While each story has its own twists and turns, they all have one thing
in common -- a line of credit or loan with Scotiabank from which funds
were procured and transferred to Thow and his numbered companies.
The former clients allege Thow convinced them to open lines of credit
with Scotiabank over the last few years, with the intent of using the
funds to invest in various schemes ranging from short- term loans to
contractors to shares in a Jamaican bank.
They say they were lent a total of $4.95 million by the bank, and now
have lines of credit and mortgages hanging over their heads with nothing
to show for it as they allege the funds were disposed of by Thow.
Many of the clients allege Scotiabank simply did not do its due
diligence when handing out the loans.
According to Barry Hewko, who lost $100,000 and owes Scotiabank $50,000,
he was in financial turmoil and was turned down by other financial
institutions for credit cards. Hewko said Thow told him he would use his
borrowing power to obtain a loan for him.
"I don't think Scotiabank checked me out at all. It's crazy. I got that
loan through his borrowing power," he said.
Irving Lozier told a similar tale of not dealing directly with the bank.
"They never even talked to us. They just said 'sign here' and that was
it," he recalled, noting that signature meant a $200,000 loan he now has
to pay back with no income and no resources.
Meanwhile, the RCMP continues to investigate Thow, but have as yet filed
no criminal charges.
The B.C. Securities Commission has set a meeting date for Aug. 30 to
determine a hearing date for the former Victoria investment adviser..
That notice of hearing states that 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.
Thow was also in a Seattle court this month to enter into a plea
agreement forcing him into drug and alcohol counselling, domestic-
violence counselling and compliance with a no-contact order in return
for the city suspending prosecution on domestic-violence charges.