Andrew A. Duffy

Friday, June 01, 2007

VANCOUVER -- Another day, another round of emotional testimony at the B.C. Securities Commission hearing into the conduct of former Berkshire investment adviser Ian Thow.

And for one of the four witnesses from Greater Victoria who appeared in front of the three-member panel yesterday, it was too much to take.

Beverly Haley, who along with husband, Paul, claims Thow bilked them for $475,000 through an investment scheme that involved funding short-term loans to Vancouver developers, broke down shortly after being sworn in.

"It's changed our lives," was all she could manage when asked by commission lawyer Doug MacKay what impact their involvement with Thow has had.

Yesterday was the third day of the hearing, and brought out some of the most emotional testimony so far from former Thow clients who claim he abused their trust to get their money, leaving them with nothing to show for it.

Kathy and Patrick Olson, who both testified yesterday, told the panel Thow's actions have torn their family unit down. "It's taken an emotional toll on our family ... my husband and I are now separated," she said. "The stress, uncertainty and the emotional rollercoaster we have experienced the last couple of years ... words just can't describe it."

During his time on the witness stand, Patrick Olson told the panel how Thow convinced them to invest $100,000 in a short-term loan scheme that would net them an eight per cent return in a month.

The money appears never to have been invested and the Olsons have nothing to show for it.

"It was too good to be true," Patrick Olson said, later telling the panel the stress resulting from the loss of the money contributed to him drinking more than usual and eventually forced him into a five-week treatment program, which he recently completed.

"It's created a lot of tension, frustration and stress," Olson said, adding he finds it nearly impossible now to trust anyone.

Paul Haley told the panel his family's loss represents two full careers worth of savings, and losing the $475,000 to Thow means not being able to help defray the education costs of their grandchildren. They also won't be able to help pay for care for elderly parents and have to think twice about every extra expense such as going out for dinner.

"This was a life-changing event," he said.

Haley also wanted to make clear why he and his wife are now in this position.

"People may wonder why we gave Thow this much money without documentation, but we had worked with him since 1993. We trusted him. He was a senior vice-president with Berkshire and a significant part of the community," Haley said.

"One of the main products financial [institutions] sell is trust, and we trusted him."

Thow, who fled to Seattle two years ago, has not appeared at the hearing and has not retained legal counsel to represent his interests at the hearing.

He was not expected to turn up as there is a warrant out for his arrest should he cross the U.S.-Canada border. It is alleged he breached the Insolvency and Bankruptcy Act by removing items from his home after his assets had been frozen in 2005.

He has been living in Seattle since then, having fled Victoria with clients and creditors claiming he owed them in excess of $32 million.

Julie Clarke, senior legal counsel for Berkshire who has been attending the hearing, said the process has been a learning experience for the company and they have taken some action to help investors in the future.

"[Investors] have to take an active approach to compliance just like we do and, in trying to help investors do that, we've put [an investor education page] on our website," she said, referring to an online guide to help investors identify potential scams. "It's not a buyer-beware type of thing, it's more like a buyer be involved."

The hearing has been adjourned until June 6.

aduffy@tc.canwest.com