Andrew A. Duffy

May 30, 2007

VANCOUVER -- The main attraction of the B.C. Securities Commission hearing into former Berkshire Group investment adviser Ian Thow was a no-show yesterday.

Thow did not turn up at the BCSC offices in Vancouver, nor did any kind of legal representative. That means what had been scheduled to be a 14-day hearing could be cut short.

Doug MacKay, the prosecutor acting on behalf of the BCSC, asked for and was granted leave to proceed without Thow being represented.

The former vice-president of Berkshire Investment Group has been living in Seattle since last summer, after fleeing Victoria and a high-profile bankruptcy that left 73 former clients and unsecured creditors claiming he owed them in excess of $32 million.

The former clients claim he cost them millions by having them invest in a series of investment schemes, though it's becoming clear Thow used that money to fuel his own lavish lifestyle.

While the man in question didn't turn up, some of his former clients did and they provided hard-hitting testimony.

Under questioning from MacKay, Gloria and William Boudreau of Sidney told how Thow convinced them to write a series of cheques totalling $349,000 to invest in a mortgage scheme.

"We never saw a penny of it," said Gloria Boudreau, who said Thow cost them their comfortable life and left them saddled with debt. She said the couple trusted Thow because he came across as "very benevolent; he seemed to be highly thought of in the community."

William Boudreau told the commission panel that Thow's actions have had a tremendous impact on their lives, health and anxiety level.

"He stole my son's inheritance," he said, adding they went along with Thow's advice because he was the senior vice- president of Berkshire and had told them he wanted to help them after they suffered losses in the stock markets.

"He got us at a very vulnerable point in our lives," he said, later adding in an interview: "It will be so nice if we can put this behind us and be able to live normally again."

And while she has heard the stories over and over again, Berkshire's legal counsel Julie Clarke admitted it was hard to listen to the Boudreaus' testimony.

"It's hard to watch them go through this, it bothers me that Mr. Thow could do this to such nice people to really abuse their trust," she said.

When asked if Berkshire has tightened the rules around compliance in the wake of Thow's actions, Clarke said there's only so much a company can do.

"No compliance regime is perfect, there's criminal laws out there and we still have crime, we still have jails," she said.

"We do the best we can to make sure that safeguards are in place. This is one adviser in more than 800 ... this was one broker who was clearly off on his own."

Thow was certainly not being protected by Berkshire's legal counsel yesterday, which caught one former client off guard.

"I'm a little surprised, I felt there was going to be a fight, I thought Berkshire was going to fight this," said Kirk Wong, who claims Thow bilked him for $250,000.

Wong said he has reviewed court cases between Berkshire and other clients and seen the firm fight tooth and nail on what could be entered into evidence. He was convinced they would fight on Thow's behalf.

But Clarke, who will attend the hearing this week as an observer, made it clear Thow is on his own.

According to MacKay, Thow's former counsel advised the BCSC he had not been retained as of last week.

But until MacKay took a quick look around during his opening remarks, he admitted there was a chance either Thow himself or new legal counsel might turn up.

"I never expected he'd be here, he wasn't going to show up after what he's pulled on us," said Don Goodwin, patriarch of the Goodwin family, which claims to be owed $1.4 million by Thow.

It was clear the pain of the betrayal was still biting away at him and that his family has been on a rollercoaster of emotion for the last two years.

"There are highs and lows, you know, sometimes you get a bunch of information and stuff and it picks you up and you think it's going to make a difference, but then it falls down and you come down again," he said.

"But I am happy this is finally started, though it's clearly going to be a long process."

The morning session was largely procedural, though in his opening remarks, MacKay painted a picture of Thow as a man who used his friendship and the trust he'd built up with clients to obtain funds and misuse them to fuel his own lifestyle.

Mackay said that during their investigation, BCSC investigators were able to confirm the $30-plus million figure Thow has been accused of bilking from his clients is well within reason.

However, he warned because of the cost and the length of time it would have taken to track every dollar lost, the BCSC traced only $5.5 million -- all traced to Thow's personal use.

"And that's more than [enough] to merit the maximum penalty," he said.

The BCSC is seeking an administrative penalty of $250,000 -- the maximum in 2005 when the investigation started -- and a lifetime ban from selling securities in B.C.

A revised schedule for the hearing, which it appears will not have to accommodate objections and cross-examinations from Thow's camp, has not been finalized.

Today, the prosecutor will question four more witnesses.

In total, MacKay planned on putting 18 former clients on the witness stand, a BCSC investigator, a forensic accountant and testimony to be read into the record from transcripts of other interviews the investigation team conducted.

aduffy@tc.canwest.com