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August 2008
By David Baines
What should have been a celebratory occasion for the RCMP integrated
market enforcement team in Vancouver has become a growing embarrassment.
On June 9, B.C. Crown prosecutors — after a three-year investigation by
the Vancouver IMET — charged Ian Thow, former senior vice president of
Berkshire Investment Group Inc. in Victoria, with 25 counts of fraud.
The charges cover about $10 million in phony investments that Thow
allegedly sold to clients and non-clients before he resigned from
Berkshire in May 2005.
For the next 17 days, the RCMP kept the charges under wraps. Presumably,
they were looking for Thow, who had slipped away to Seattle in a
midnight border crossing several months after he resigned from
Berkshire. Once they had him in hand, they would triumphantly announce
the charges.
However, when the RCMP announced the charges on June 26, there was no
sign of Thow. The RCMP refuse to say where he is, or even if they knows
where he is. Victims, who have waited three years for this moment, were
not amused.
Until Thow’s resignation from Berkshire, he lived a lavish lifestyle,
which included a waterfront home, three jets, a helicopter, a yacht and
personal indulgences such as gambling trips to Las Vegas and $10,000
bottles of scotch.
How he financed these extravagances did not become clear until he left
Berkshire and clients filed a series of lawsuits alleging he had induced
them to invest millions of dollars in non-existent mortgage schemes and
fictitious investments in the National Commercial Bank of Jamaica.
In most of these lawsuits, clients named Berkshire as a co-defendant,
arguing the firm’s compliance people should have detected the schemes.
Berkshire officials denied responsibility, arguing that Thow had
conducted the transactions “off book” and, therefore, beyond the purview
of compliance staff.
(At the time of the alleged offences, Berkshire-TWC Financial Group Inc.
was controlled by Michael Lee-Chin, owner of AIC Ltd., the Burlington,
Ont.-based mutual fund company. Berkshire has since been acquired by
Manulife Financial Corp. and its divisions have been renamed.)
After Thow’s scheme was detected, he was quickly assigned into
bankruptcy, leaving more than $32 million in debts and few assets. In
September 2005, he slipped across the border to Seattle, where he worked
as a mortgage broker until his notoriety caught up with him and his
employer fired him.
The B.C. Securities Commission held a hearing into Thow’s conduct and,
in October 2007, branded his scheme as “one of the most callous and
audacious frauds this province has seen.” The panel fined him $6 million
(which he will never pay due to his insolvency) and banned him from the
B.C. securities market for life.
The Mutual Fund Dealers Association of Canada concurrently raised
questions about Berkshire’s supervision of Thow. In December 2007,
Berkshire settled the matter by admitting it should have done a better
job checking into two earlier complaints about Thow’s dealings.
Berkshire agreed to pay a $500,000 fine and $50,000 in costs.
Berkshire, to its credit, has settled most of the lawsuits filed by
clients. Victims are now looking for criminal redress against Thow. Some
say the RCMP should have arrested him before he had a chance to leave
the jurisdiction. Even at that early date, there was strong evidence he
had committed serious crimes and there was a high risk he would flee to
the U.S. (He has dual citizenship.) Now, the RCMP is in the embarrassing
position of having to find and extradite him from whatever jurisdiction
he is in. IE |
