Andrew A. Duffy

Friday, June 15, 2007

VANCOUVER -- The B.C. Securities Commission hearing into disgraced Berkshire investment adviser Ian Thow wrapped up yesterday with the commission panel hearing of a grounded pilot, and a retired couple reduced to watching every penny they have.

It was yet more in what has been a long string of emotional testimony from some of Thow's former clients, left behind when he fled the country in the summer of 2005 after filing for bankruptcy.

Those clients and creditors say Thow owes them in excess of $30 million. They claim he cost them millions by having them invest in a series of schemes that included buying shares in the National Commercial Bank of Jamaica, an initial public offering for Berkshire and providing short-term loans to developers.

But as Daryl Goodwin from Delta pointed out yesterday when he took the stand, those investments were never made.

The Goodwin family collectively claims Thow took them for $1.4 million.

The Air Canada Jazz pilot, who admits he has not been able to fly since last July because he is suffering from anxiety and depression and has trouble sleeping as a result of Thow's actions, said the investment he made in the NCB Jamaica simply did not exist.

"I've since found out I didn't own any of it," he said, noting the experience has destroyed his family. "My father's health has deteriorated, it's destroyed my brother's life.

"And personally it's destroyed me in terms of being able to trust anyone."

He's not the only one. On more than one occasion during the three weeks of the hearing, former clients scanned the room each day trying to determine who was there and what their purpose was.

"We just can't trust anyone anymore," said Goodwin, who said his trust has been further undermined by allegations some of Thow's former clients have been bankrolling him, now that he lives in Seattle.

But like everyone else who has testified at the hearing, Goodwin admits he trusted Thow at one point and invested $1.6 million in what he thought were bank shares.

Goodwin did manage to get back all but $633,000, as Thow would sporadically write him cheques claiming the money represented interest he was making from his investment.

But as forensic accountant James Blatchford showed the commission panel last week in a series of schematic charts, some of the money Goodwin got from Thow came from some of his other clients.

For Victoria residents Douglas and Olga McColl, Thow's actions have cost them what was to have been a carefree retirement.

"He has literally stripped me, my account, completely," Olga told the commission panel. "I've had to go to my daughter to help me financially."

In a later interview, Olga McColl said they have had to learn to pick and choose and live with what they have.

"I've always been so independent," she said, with tears welling in her eyes. "You scrimp and save and put the kids through school and get to a position when things are better, and then you have nothing."

Together, the McColls invested $398,000 with Thow to be used in short-term loans for Vancouver developers. They have nothing to show for their faith in him.

"It has certainly curtailed things I might have done or wanted to do in my retirement, in my golden years," said Douglas.

The panel also heard how Thow recommended that neither of the McColls tell the other about what they were doing with their investments -- the truth came to light only when Thow's story hit the newspapers.

The end of the hearing did not seem to bring much relief for Thow's victims, as they choose to be called.

For many of them it is just another step along the way to getting some kind of justice, and a hefty fine and trading bans for Thow would never give them any kind of satisfaction.

"This is one arm of the system and hopefully it is a positive outcome," said Goodwin, who hopes they will also get a positive result from the Mutual Fund Dealer's Association investigation into Berkshire. "There's no satisfaction from this, but it is a step along the way."

Olga McColl said the only satisfaction she expects would be seeing Thow in a cold jail cell.

"We're hoping they will be able to nail him because of all this. We're hoping he doesn't get off scot-free and isn't able to take advantage of other people like us," she said. "I'd like to see him in a six-foot room with bars, and I'm hoping this will help that."

The BCSC is seeking a $250,000 administrative penalty, the maximum fine allowed when the infractions took place, and a lifetime ban from trading in B.C.

As of May 18, 2006, the fine per contravention of the B.C. Securities Act was raised to $1 million, meaning the BCSC would be seeking a penalty of as much as $4 million, had Thow's activities taken place after that.

But his former clients doubt that would have been any kind of deterrent.

"It wouldn't matter what they fined him. We know the restitution will never happen, he will never pay it, he doesn't pay anything he doesn't follow the law," said Goodwin.

With the hearing now wrapped -- it ended early because remaining witnesses' schedules could not fit into the hearing timetable -- BCSC counsel Doug MacKay will have until June 29 to present a written argument to the commission panel to consider before it makes a ruling.

aduffy@tc.canwest.com