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
Fraudster Thow missing
- By: David Baines
- July 28, 2008 October 29, 2019
- 15:16
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