Andrew A. Duffy

Saturday, December 15, 2007

Ron Black wonders whether he would have lost everything to investment adviser Ian Thow if Berkshire Investment Group had done its job properly.

Black lost his life savings, about $600,000, as Thow pilfered his money and used it to pay off some of his other clients or to fuel his lavish lifestyle, which included personal aircraft, luxury yachts and expensive cars.

Some of Black’s money was taken in the weeks before Thow resigned from Berkshire, seven months after Berkshire got its first indication its vice-president in Victoria was operating as a maverick.

This week, the Mutual Fund Dealers Association concluded after a Vancouver hearing that a reasonable supervisory investigation by Berkshire would have brought Thow’s activities to light and likely have prevented a number of his former clients from losing more of their savings.

In the settlement agreement released Thursday, Berkshire was fined $500,000, plus $50,000 to cover the investigation and hearing costs incurred by the MFDA.

Black echoed the response of other Thow victims when told of the fine. “What the hell is $500,000 to the millions that were lost?” he said, noting he is also frustrated with the time it’s taking the Crown to lay charges in the case and have Thow extradited to Canada to face trial. The provincial Crown is still doing a charge assessment and going through the reams of documents provided by the RCMP’s Integrated Market Enforcement Team.

“It’s frustrating,” said Black, who has tried to move on with his life, having reached a mediated settlement with the company for a fraction of what he lost. Black was one of 29 former clients who got a share of $4.1 million from Berkshire. “But yes, I gave Thow money in April or May of 2005.” He wasn’t the only one. According to the settlement agreement between Berkshire and the Mutual Fund Dealers Association, Thow managed to squeeze $510,000 plus $30,000 US from clients and friends between April 20, 2005, and June 1, 2005.

And that was a drop in the bucket compared to the $5.8 million he managed to get out of clients and friends from the time the first complaint was lodged with Berkshire in September 2004.

That money was a portion of the $32 million former clients and creditors claim to have lost to Thow.

They claim Thow convinced them to invest in schemes that ranged from a Jamaican bank to loans for Vancouver developers and seed shares with his former employer. After resigning from Berkshire, Thow filed for bankruptcy in Canada and the U.S., left Victoria and has been living in Seattle since August 2005.

The settlement between Berkshire and the MFDA left a bad taste in some former clients’ mouths because of the narrow scope of the investigation — the association investigated Berkshire’s response to the first complaint, lodged Sept. 16, 2004, and a subsequent complaint April 20, 2005.

Black is one of them, though he understands Berkshire wasn’t apprised of what was going on, and he admits his frustration probably has more to do with the fact he and the other victims trusted Thow.

“I know a lot of people would say the same thing, ‘We trusted him, so we didn’t ask for any documentation,’” he said. “[Thow] would say ‘Do you trust me?’ and of course we’d say yes, and he’d say, ‘Then don’t worry about it.’

“We never knew there was anything to complain about.”

If Thow had been able to placate a couple of big-time investors, he might have been able to carry on.

According to details included in the settlement agreement, the first complaint came from a wealthy businessman identified only as LV who had given Thow $1.2 million to invest in the National Commercial Bank of Jamaica.

He had complained to a friend about getting information on his investment — when he asked Thow for documentation, Thow gave him $1.2 million in travel vouchers for his aircraft company. LV’s friend passed the information on to Berkshire.

When Thow was alerted that a complaint had been made, he told Berkshire it was a misunderstanding — that the investor had bought aircraft time and now wanted his money back and was trying to pressure him to return it by making up a story about the National Commercial Bank of Jamaica shares.

Thow then convinced the investor to call Berkshire and tell them the same thing, promising he would return the $1.2 million.

The second complaint came from an investor identified as DS, who invested $200,000 with Thow for shares in the same bank.

The story was similar to LV’s tale, with Thow claiming DS bought aircraft time, not shares in the bank, and he wanted Berkshire’s help in getting his money back.

In DS’s case, however, the cheque to Thow included the phrase “NCB bank shares” on the memo line.

Thow tried to convince DS not to meet with Berkshire at its head office in Burlington, Ont., claiming the money was ready for him if he cancelled the meeting.

While DS was in transit to the meeting, his lawyer called to tell him Thow had the money in place. As a result, the meeting was cancelled, but DS was never paid and eventually sued Thow.

On May 5, Thow met with Berkshire, submitted a letter of resignation and refused to answer most of the questions about his dealings with DS.

Thow denied having sold shares in the National Commercial Bank of Jamaica. When confronted with the cheque, Thow said his copy did not include the phrase: “NCB bank shares.”

That kind of response would not come as a surprise to Thow’s victims, who as a group are used to hearing his lies.

“How many times did he say to me, ‘Trust me.’ ?” Black said.


aduffy@tc.canwest.com